10-Q

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 March 31, 2022

☐ 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)

_________________________________________________________________________________

Delaware			36-0781620
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
One Baxter Parkway,	Deerfield,	Illinois	60015
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	BAX (NYSE)	New York Stock Exchange
		Chicago Stock Exchange
0.4% Global Notes due 2024	BAX 24	New York Stock Exchange
1.3% Global Notes due 2025	BAX 25	New York Stock Exchange
1.3% Global Notes due 2029	BAX 29	New York Stock Exchange
3.95% Global Notes due 2030	BAX 30	New York Stock Exchange
1.73% Global Notes due 2031	BAX 31	New 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 filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller 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 April 21, 2022 was 503,528,678 shares.

BAXTER INTERNATIONAL INC.

FORM 10-Q

For the quarterly period ended March 31, 2022

TABLE OF CONTENTS

		Page Number
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Changes in Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41
PART II.	OTHER INFORMATION	42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 6.	Exhibits	43
Signature		44

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

Baxter International Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in millions, except share information)

	March 31, 2022		December 31, 2021
Current assets:
Cash and cash equivalents	$	2,294	$	2,951
Accounts receivable, net of allowances of $129 in 2022 and $122 in 2021	2,471		2,629
Inventories	2,548		2,453
Prepaid expenses and other current assets	860		839
Total current assets	8,173		8,872
Property, plant and equipment, net	5,114		5,178
Goodwill	9,816		9,836
Other intangible assets, net	7,693		7,792
Operating lease right-of-use assets	609		630
Other non-current assets	1,311		1,213
Total assets	$	32,716	$	33,521
Current liabilities:
Short-term debt	$	200	$	301
Current maturities of long-term debt and finance lease obligations	209		210
Accounts payable	1,223		1,246
Accrued expenses and other current liabilities	2,258		2,479
Total current liabilities	3,890		4,236
Long-term debt and finance lease obligations, less current portion	16,765		17,149
Operating lease liabilities	508		522
Other non-current liabilities	2,434		2,493
Total liabilities	23,597		24,400
Commitments and contingencies
Equity:
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2022 and 2021	683		683
Common stock in treasury, at cost,180,058,105 shares in 2022 and 181,879,516 shares in 2021	(11,422)		(11,488)
Additional contributed capital	6,207		6,197
Retained earnings	16,994		17,065
Accumulated other comprehensive (loss) income	(3,387)		(3,380)
Total Baxter stockholders’ equity	9,075		9,077
Noncontrolling interests	44		44
Total equity	9,119		9,121
Total liabilities and equity	$	32,716	$	33,521

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Baxter International Inc.

Condensed Consolidated Statements of Income (unaudited)

(in millions, except per share data)

	Three months ended March 31,
	2022		2021
Net sales	$	3,707	$	2,946
Cost of sales	2,359		1,801
Gross margin	1,348		1,145
Selling, general and administrative expenses	1,052		627
Research and development expenses	150		128
Other operating income, net	(17)		—
Operating income	163		390
Interest expense, net	85		34
Other (income) expense, net	(16)		5
Income before income taxes	94		351
Income tax expense	21		51
Net income	73		300
Net income attributable to noncontrolling interests	2		2
Net income attributable to Baxter stockholders	$	71	$	298
Earnings per share
Basic	$	0.14	$	0.59
Diluted	$	0.14	$	0.58
Weighted-average number of shares outstanding
Basic	503		505
Diluted	509		511

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Baxter International Inc.

Condensed Consolidated Statements of Comprehensive Income (unaudited)

(in millions)

	Three months ended March 31,
	2022		2021
Net income	$	73	$	300
Other comprehensive income (loss), net of tax:
Currency translation adjustments, net of tax expense (benefit) of ($11) and $17 for the three months ended March 31, 2022 and 2021, respectively.	(15)		(208)
Pension and other postretirement benefits, net of tax expense of $3 and $8 for the three months ended March 31, 2022 and 2021, respectively.	9		30
Hedging activities, net of tax expense (benefit) of ($1) and $3 for the three months ended March 31, 2022 and 2021, respectively.	(2)		12
Debt securities, net of tax expense of $1 and zero for the three months ended March 31, 2022 and 2021, respectively	1		—
Total other comprehensive loss, net of tax	(7)		(166)
Comprehensive income	66		134
Less: Comprehensive income attributable to noncontrolling interests	2		2
Comprehensive income attributable to Baxter stockholders	$	64	$	132

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 March 31, 2022
	Baxter International Inc. stockholders' equity
	Common stock shares	Common stock		Common stock shares in treasury	Common stock in treasury		Additional contributed capital		Retained earnings		Accumulated other comprehensive income (loss)		Total Baxter stockholders' equity		Noncontrolling interests		Total equity
Balance as of January 1, 2022	683	$	683	182	$	(11,488)	$	6,197	$	17,065	$	(3,380)	$	9,077	$	44	$	9,121
Net income	—	—		—	—		—		71		—		71		2		73
Other comprehensive income (loss)	—	—		—	—		—		—		(7)		(7)		—		(7)
Stock issued under employee benefit plans and other	—	—		(2)	66		10		—		—		76		—		76
Dividends declared on common stock	—	—		—	—		—		(142)		—		(142)		—		(142)
Change in noncontrolling interests	—	—		—	—		—		—		—		—		(2)		(2)
Balance as of March 31, 2022	683	$	683	180	$	(11,422)	$	6,207	$	16,994	$	(3,387)	$	9,075	$	44	$	9,119

	For the three months ended March 31, 2021
	Baxter International Inc. stockholders' equity
	Common stock shares	Common stock		Common stock shares in treasury	Common stock in treasury		Additional contributed capital		Retained earnings		Accumulated other comprehensive income (loss)		Total Baxter stockholders' equity		Noncontrolling interests		Total equity
Balance as of January 1, 2021	683	$	683	179	$	(11,051)	$	6,043	$	16,328	$	(3,314)	$	8,689	$	37	$	8,726
Net income	—	—		—	—		—		298		—		298		2		300
Other comprehensive income (loss)	—	—		—	—		—		—		(166)		(166)		—		(166)
Purchases of treasury stock	—	—		4	(300)		—		—		—		(300)		—		(300)
Stock issued under employee benefit plans and other	—	—		(2)	55		—		—		—		55		—		55
Dividends declared on common stock	—	—		—	—		—		(124)		—		(124)		—		(124)
Change in noncontrolling interests	—	—		—	—		—		—		—		—		(1)		(1)
Balance as of March 31, 2021	683	$	683	181	$	(11,296)	$	6,043	$	16,502	$	(3,480)	$	8,452	$	38	$	8,490

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)

	Three months ended March 31,
	2022		2021
Cash flows from operations
Net income	$	73	$	300
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization	380		217
Deferred income taxes	(55)		(25)
Stock compensation	32		22
Net periodic pension and other postretirement costs	14		26
Other	(12)		14
Changes in balance sheet items:
Accounts receivable, net	153		51
Inventories	(105)		(129)
Prepaid expenses and other current assets	(13)		2
Accounts payable	5		22
Accrued expenses and other current liabilities	(221)		(124)
Other	(43)		1
Cash flows from operations	208		377
Cash flows from investing activities
Capital expenditures	(140)		(171)
Acquisitions, net of cash acquired, and investments	(174)		(381)
Other investing activities, net	10		14
Cash flows from investing activities	(304)		(538)
Cash flows from financing activities
Repayments of debt	(404)		—
Net decreases in debt with original maturities of three months or less	(45)		—
Cash dividends on common stock	(140)		(125)
Proceeds from stock issued under employee benefit plans	66		48
Purchases of treasury stock	—		(253)
Other financing activities, net	(25)		(28)
Cash flows from financing activities	(548)		(358)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	(13)		(31)
Decrease in cash, cash equivalents and restricted cash	(657)		(550)
Cash, cash equivalents and restricted cash at beginning of period (1)	2,956		3,736
Cash, cash equivalents and restricted cash at end of period (1)	$	2,299	$	3,186

(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 March 31, 2022, December 31, 2021, and March 31, 2021 (in millions):

	March 31, 2022		December 31, 2021		March 31, 2021
Cash and cash equivalents	$	2,294	$	2,951	$	3,182
Restricted cash included in prepaid expenses and other current assets	5		5		4
Cash, cash equivalents and restricted cash	$	2,299	$	2,956	$	3,186

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 or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote 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, 2021 (2021 Annual Report).

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation 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.

Risks and Uncertainties Related to COVID-19 and Global Economic Conditions

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and continue to take. Initial measures taken in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in medical procedures in 2020. The pandemic has created significant volatility in the demand for our products. For further information about our revenues by product category, refer to Note 9. Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic. For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron variants, subvariants and other virus mutations as well as vaccine distribution and hesitancy. The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees, moratoriums on elective procedures and mandatory quarantines and travel restrictions). Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility. We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the pandemic and other exogenous factors (including significant weather events, disruptions to certain ports of call around the world and certain geopolitical events) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods. Many of our manufacturing plant and distribution center personnel are currently unvaccinated, and we may also experience employee resistance in complying with current and future government vaccine and testing mandates, which may cause labor shortages significantly impacting manufacturing production and distribution center productivity. We expect that these challenges as well as evolving governmental restrictions and requirements, among other factors, may continue to have an adverse effect on our business.

New Accounting Standards

Recently adopted accounting pronouncements

As of January 1, 2022, we adopted Accounting Standards Update (ASU) 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement. These changes are intended to avoid recognizing a day-one loss for a lease with variable payments even though the lessor expects the arrangement will be profitable overall. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements.

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2. ACQUISITIONS AND OTHER ARRANGEMENTS

Hillrom

On December 13, 2021, we completed our acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion. Including the assumption of Hillrom's outstanding debt, the enterprise value of the transaction was approximately $12.8 billion. Under the terms of the transaction agreement, Hillrom shareholders received $156.00 in cash per outstanding Hillrom common share.

The following table summarizes the fair value of the total consideration paid:

(in millions)
Cash consideration paid to Hillrom shareholders(a)	$	10,474
Fair value of equity awards issued to Hillrom equity award holders(b)	2
Total Consideration	$	10,476

(a) Represents cash consideration transferred of $156.00 per outstanding Hillrom common share to existing shareholders and holders of equity awards that vested at closing pursuant to their original terms.

(b) Represents the pre-acquisition service portion of the fair value of 668 thousand replacement restricted stock units issued to Hillrom equity award holders at closing.

The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2022. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for acquired intangible assets, goodwill and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date.The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:

(in millions)
Assets acquired and liabilities assumed
Cash and cash equivalents	$	399
Accounts receivable	590
Inventories	557
Prepaid expenses and other current assets	49
Property, plant and equipment	502
Goodwill	6,795
Other intangible assets	6,029
Operating lease right-of-use assets	74
Other non-current assets	125
Short-term debt	(250)
Accounts payable	(140)
Accrued expenses and other current liabilities	(552)
Long-term debt and finance lease obligations	(2,118)
Operating lease liabilities	(57)
Other non-current liabilities	(1,527)
Total assets acquired and liabilities assumed	$	10,476

In the first quarter of 2022, we recorded measurement period adjustments to increase other intangible assets of $7 million, increase deferred income tax liabilities of $11 million, other individually insignificant adjustments for a net

8

decrease to assets acquired and liabilities assumed of $6 million and a corresponding increase to goodwill of $10 million. The measurement period adjustments did not have a significant impact our results of operations.

The goodwill, which is not deductible for tax purposes, includes the value of an assembled workforce as well as the overall strategic benefits provided to our product portfolio and is included in the Hillrom segment.

For the three months ended March 31, 2022, we recognized $159 million of incremental costs of sales from the fair value step-ups on acquired Hillrom inventory that was sold in the current period.

Other Business Development Activities

In March 2022, we entered into an agreement with a subsidiary of Pfizer Inc. to acquire the rights to Zosyn, a premixed frozen piperacillin-tazobactam product, in the U.S. and Canada. Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia. Under the terms of the acquisition, we paid the acquisition price of $122 million currently, received specified intellectual property, including patent rights, in the current period and will receive additional intellectual property, including the product rights to Zosyn, in one year. Under the arrangement, we are entitled to receive profit sharing payments from sales of Zosyn until the product rights transfer to us in March 2023.

The transaction has been accounted for as an asset acquisition, as substantially all of the fair value of the assets being acquired under the arrangement was concentrated in the product rights that we will receive, which we classify as a developed technology intangible asset. Accordingly, the $122 million purchase price was primarily allocated to the developed technology intangible asset class and will be amortized over an estimated useful life of 9 years.

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 months ended March 31, 2022 and 2021.

	Three months ended March 31,
(in millions)	2022		2021
Balance at beginning of period	$	122	$	125
Charged to costs and expenses	6		1
Write-offs	(1)		—
Currency translation adjustments	2		(6)
Balance at end of period	$	129	$	120

Inventories

(in millions)	March 31, 2022		December 31, 2021
Raw materials	$	656	$	591
Work in process	285		300
Finished goods	1,607		1,562
Inventories	$	2,548	$	2,453

Property, Plant and Equipment, Net

(in millions)	March 31, 2022		December 31, 2021
Property, plant and equipment, at cost	$	11,757	$	11,728
Accumulated depreciation	(6,643)		(6,550)
Property, plant and equipment, net	$	5,114	$	5,178

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Interest Expense, Net

	Three months ended March 31,
(in millions)	2022		2021
Interest expense, net of capitalized interest	$	88	$	37
Interest income	(3)		(3)
Interest expense, net	$	85	$	34

Other (Income) Expense, Net

	Three months ended March 31,
(in millions)	2022		2021
Foreign exchange (gains) losses, net	$	(11)	$	(3)
Pension and other postretirement benefit plans	(5)		4
Other, net	—		4
Other (income) expense, net	$	(16)	$	5

Non-Cash Operating and Investing Activities

Right-of-use operating lease assets obtained in exchange for lease obligations for the three months ended March 31, 2022 and 2021 were $14 million and $5 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of March 31, 2022 and 2021 were $53 million and $63 million, respectively.

There were no unsettled share repurchases as of March 31, 2022. Unsettled share repurchases included in accrued expenses and other current liabilities were $47 million as of March 31, 2021.

4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following is a reconciliation of goodwill by business segment.

(in millions)	Americas		EMEA		APAC		Hillrom		Total
Balance as of December 31, 2021	$	2,517	$	309	$	224	$	6,786	$	9,836
Acquisition accounting adjustments	—		—		—		10		10
Currency translation	(29)		(3)		(3)		5		(30)
Balance as of March 31, 2022	$	2,488	$	306	$	221	$	6,801	$	9,816

As of March 31, 2022, there were no reductions in goodwill relating to impairment losses.

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Other intangible assets, net

The following is a summary of our other intangible assets.

(in millions)	Customer relationships		Developed technology, including patents		Other amortized intangible assets		Indefinite-lived intangible assets		Total
March 31, 2022
Gross other intangible assets	$	3,457	$	3,883	$	340	$	2,140	$	9,820
Accumulated amortization	(262)		(1,638)		(227)		—		(2,127)
Other intangible assets, net	$	3,195	$	2,245	$	113	$	2,140	$	7,693
December 31, 2021
Gross other intangible assets	$	3,437	$	3,801	$	344	$	2,140	$	9,722
Accumulated amortization	(162)		(1,556)		(212)		—		(1,930)
Other intangible assets, net	$	3,275	$	2,245	$	132	$	2,140	$	7,792

Intangible asset amortization expense was $217 million and $64 million for the three months ended March 31, 2022 and 2021, respectively.

5. FINANCING ARRANGEMENTS

Significant Debt Activity

In March 2022, we repaid $170 million of our $2.0 billion three-year term loan facility and $175 million of our $2.0 billion five-year term loan facility. The loss from the early extinguishment of this debt was not significant.

Credit Facilities

Our U.S. dollar-denominated revolving credit facility has a capacity of $2.5 billion and 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 March 31, 2022 or December 31, 2021.

Commercial Paper

As of March 31, 2022, we had $200 million of commercial paper outstanding with a weighted-average interest rate of 0.5% and an original weighted-average term of 89 days. As of December 31, 2021, we had $300 million of commercial paper outstanding with a weighted-average interest rate of 0.27% and an original weighted-average term of 88 days.

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, 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 March 31, 2022 and December 31, 2021, our total recorded reserves with respect to legal and environmental matters were $57 million and $72 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 and monetary sanctions, including significant civil or criminal penalties. With respect to

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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 an ongoing environmental remediations associated with historic operations at certain of our facilities. As of March 31, 2022 and December 31, 2021, our environmental reserves, which are measured on an undiscounted basis, were $18 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 August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011.

In November 2019, we and certain of our officers were named in a class action complaint captioned Ethan E. Silverman et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased shares of our common stock during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter common stock between February 21, 2019 and October 23, 2019. The plaintiff alleged that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to certain intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses, as well as our internal controls over financial reporting. On January 29, 2020, the Court appointed Varma Mutual Pension Insurance Company and Louisiana Municipal Police Employees Retirement System as lead plaintiffs in the case. Plaintiffs filed an amended complaint on June 25, 2020 containing substantially the same allegations. On August 24, 2020, we filed a motion to dismiss the amended complaint. On January 12, 2021, the Court granted our motion to dismiss the amended complaint but gave plaintiffs an opportunity to file a further-amended complaint. The parties reached an agreement to settle the case for $16 million, subject to the completion of confirmatory discovery and final approval by the Court. The Court granted final approval of the settlement on August 11, 2021 and the settlement became effective on September 13, 2021.

As initially disclosed in our Form 8-K on October 24, 2019, we voluntarily advised the staff of the SEC of an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchanges gains and losses. We also received a stockholder request for inspection of our books and records in connection with the October 24, 2019 announcement. The Company has cooperated with the staff of the SEC in its investigation into related matters, and on February 18, 2022, we reached a settlement with the SEC. Without admitting or denying the findings in the administrative order issued by the SEC, we agreed to pay a civil penalty of $18 million and to cease and desist from violations of specified provisions of the federal securities laws and related rules. In the order, the SEC acknowledged the Company’s cooperation. We paid the penalty in the first quarter of 2022.

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 agreement to settle these lawsuits in the third quarter of 2021 for amounts that are not material to our financial results, which were paid in the fourth quarter of 2021. The settlement of these claims does not preclude potential future lawsuits.

In July 2021, Hill-Rom, Inc. 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

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with the False Claims Act and the Anti-Kickback Statute. Hillrom has been working with the DHHS and the DOJ to provide information responsive to the subpoena. Hillrom also voluntarily began a related internal review and Hillrom and now Baxter have been cooperating fully with the DHHS and the DOJ with respect to these matters.

The DHHS often issues this type of subpoena 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, 2 and 3 of The Sherman Antitrust Act of 1890 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.

7. STOCKHOLDERS’ EQUITY

Stock-Based Compensation

Stock compensation expense totaled $32 million and $22 million in the first quarter of 2022 and 2021, respectively. Approximately 75% of stock compensation expense is classified within selling, general and administrative (SG&A) expense with the remainder classified in cost of sales and research and development (R&D) expense.

We awarded stock compensation grants which consisted of 1.8 million stock options, 1.2 million restricted stock units (RSUs) and 0.4 million performance stock units (PSUs) during the first quarter of 2022. The grant date fair values of stock options, RSUs and PSUs awarded in the first quarter of 2022 were $33 million, $102 million and $34 million, respectively. Stock options and RSUs generally vest in one-third increments over a three-year period. The vesting conditions for PSUs granted are equally divided based on our compound annual sales growth rate performance, our adjusted return on invested capital performance and on our stock performance relative to a specified peer group. All of the PSUs vest at the end of the applicable three-year service period.

Stock Options

The weighted-average Black-Scholes assumptions used in establishing the fair value of stock options granted during the period, along with weighted-average grant date fair values, were as follows:

	Three months ended March 31,
	2022			2021
Expected volatility	24		%	25		%
Expected life (in years)	5.5			5.5
Risk-free interest rate	1.8		%	0.8		%
Dividend yield	1.3		%	1.3		%
Fair value per stock option	$	18		$	16

The total intrinsic value of stock options exercised was $27 million and $21 million during the first quarters of 2022 and 2021, respectively.

As of March 31, 2022, the unrecognized compensation cost related to all unvested stock options of $80 million is expected to be recognized as expense over a weighted-average period of 1.9 years.

RSUs

As of March 31, 2022, the unrecognized compensation cost related to all unvested RSUs of $163 million is expected to be recognized as expense over a weighted-average period of 2.2 years.

PSUs

As of March 31, 2022, the unrecognized compensation cost related to all unvested PSUs of $50 million is expected to be recognized as expense over a weighted-average period of 1.9 years.

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Cash Dividends

Cash dividends declared per share for the three months ended March 31, 2022 and 2021 were $0.28 and $0.245, respectively.

Stock Repurchase Programs

In July 2012, the Board of Directors authorized the repurchase of up to $2.0 billion of our common stock. The Board of Directors increased this authority by an additional $1.5 billion in each of November 2016 and February 2018, by an additional $2.0 billion in November 2018 and by an additional $1.5 billion in October 2020. During the first quarter of 2022, we did not repurchase any shares under this authority. During the first quarter of 2021, we repurchased 3.6 million shares under this authority pursuant to a Rule 10b5-1 plan. We had $1.3 billion remaining available under the authorization as of March 31, 2022.

8. ACCUMULATED OTHER COMPREHENSIVE INCOME

Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income, currency translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans and gains and losses on cash flow hedges.

The following table is a net-of-tax summary of the changes in accumulated other comprehensive (loss) income (AOCI) by component for the three months ended March 31, 2022 and 2021.

(in millions)	CTA		Pension and OPEB plans		Hedging activities		Debt securities		Total
Gains (losses)
Balance as of December 31, 2021	$	(2,907)	$	(347)	$	(126)	$	—	$	(3,380)
Other comprehensive income (loss) before reclassifications	(15)		2		(1)		1		(13)
Amounts reclassified from AOCI (a)	—		7		(1)		—		6
Net other comprehensive income (loss)	(15)		9		(2)		1		(7)
Balance as of March 31, 2022	$	(2,922)	$	(338)	$	(128)	$	1	$	(3,387)

(in millions)	CTA		Pension and OPEB plans		Hedging activities		Total
Gains (losses)
Balance as of December 31, 2020	$	(2,587)	$	(574)	$	(153)	$	(3,314)
Other comprehensive income (loss) before reclassifications	(208)		13		3		(192)
Amounts reclassified from AOCI (a)	—		17		9		26
Net other comprehensive income (loss)	(208)		30		12		(166)
Balance as of March 31, 2021	$	(2,795)	$	(544)	$	(141)	$	(3,480)

(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 during the three months ended March 31, 2022 and 2021.

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021		Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits	$	(9)	$	(21)	Other (income) expense, net
Less: Tax effect	2		4		Income tax expense
	$	(7)	$	(17)	Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts	$	2	$	(10)	Cost of sales
Interest rate contracts	(1)		(1)		Interest expense, net
	1		(11)		Total before tax
Less: Tax effect	—		2		Income tax expense
	$	1	$	(9)	Net of tax
Total reclassifications for the period	$	(6)	$	(26)	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.

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 geographic segments including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; surgical hemostat and sealant products; hospital beds and services; surgical tables, lights and pendants; and patient monitoring and diagnostic technologies. For most of those sales, 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, in all of our segments, we enter into other types of contracts including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements. 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. 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 March 31, 2022, we had $8.2 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more, which are primarily included in the Americas segment. 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 30% of this amount as revenue over the remainder of 2022, 30% in 2023, 20% in 2024, 15% in 2025 and 5% thereafter.

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Significant Judgments

Revenues from product sales are recorded at the net sales price (transaction 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 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 months ended March 31, 2022 and 2021 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement.

Contract Balances

The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances and deposits (contract liabilities) on our condensed consolidated balance sheets. Net trade accounts receivable was $2.3 billion and $2.4 billion as of March 31, 2022 and December 31, 2021, respectively.

For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one to five years. For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products. In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer. In those arrangements, the contract asset becomes a trade account receivable as consumable medical products are provided and billed, generally over one to seven years.

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The following table summarizes our contract assets:

(in millions)	March 31, 2022		December 31, 2021
Contract manufacturing services	$	47	$	50
Software sales	42		45
Bundled equipment and consumable medical products contracts	111		100
Contract assets	$	200	$	195

The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:

(in millions)	March 31, 2022		December 31, 2021
Prepaid expenses and other current assets	$	84	$	84
Other non-current assets	116		111
Contract assets	$	200	$	195
Accrued expenses and other current liabilities	$	166	$	162
Other non-current liabilities	74		84
Contract liabilities	$	240	$	246

Contract liabilities represent deferred revenues that arise as a result of cash received from customers or where the timing of billing for services precedes satisfaction of our performance obligations. Such remaining performance obligations represent the portion of the contract price for which work has not been performed and are primarily related to our installation and service contracts. We expect to satisfy the majority of the remaining performance obligations and recognize revenue related to installation and service contracts within the next 12 months with most of the non-current performance obligations satisfied within 24 months.

The following table summarizes contract liability activity for the three months ended March 31, 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations.

	Three Months Ended March 31, 2022
Balance at beginning of period	$	246
New revenue deferrals	116
Revenue recognized upon satisfaction of performance obligations	(122)
Balance at end of period	$	240

During the three months ended March 31, 2021, the amount of revenue recognized that was included in contract liabilities as of December 31, 2020 was not significant.

Disaggregation of Net Sales

In connection with our acquisition of Hillrom in December 2021, we have added three new product categories: Patient Support Systems, Front Line Care and Surgical Solutions.

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The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:

	Three Months Ended March 31,
	2022						2021
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	225	$	669	$	894	$	216	$	706	$	922
Medication Delivery 2	472		234		706		411		241		652
Pharmaceuticals 3	157		364		521		200		352		552
Clinical Nutrition 4	84		143		227		83		151		234
Advanced Surgery 5	136		92		228		126		91		217
Acute Therapies 6	68		120		188		81		126		207
BioPharma Solutions 7	52		104		156		44		91		135
Patient Support Systems 8	295		88		383		—		—		—
Front Line Care 9	207		87		294		—		—		—
Surgical Solutions 10	37		41		78		—		—		—
Other 11	24		8		32		19		8		27
Total Baxter	$	1,757	$	1,950	$	3,707	$	1,180	$	1,766	$	2,946

1Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services.

2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products.

5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

7BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies.

8Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies.

9Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology vision screening and physical assessment.

10Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

11Other includes sales of miscellaneous product and service offerings.

Lease Revenue

We lease smart beds, such as bariatric, critical care, maternal, and home care beds, as well as other surfaces, to customers during periods of peak demand or for specialty purposes. We also lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, IV fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices.

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The components of lease revenue for the three months ended March 31, 2022 and 2021 were:

(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021
Sales-type lease revenue	$	3	$	6
Operating lease revenue	122		34
Variable lease revenue	20		17
Total lease revenue	$	145	$	57

Our net investment in sales-type leases was $109 million as of March 31, 2022, of which $38 million originated in 2018 and prior, $16 million in 2019, $28 million in 2020, $25 million in 2021, and $2 million in 2022.

10. BUSINESS OPTIMIZATION CHARGES

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. In the current period, restructuring charges include actions taken in connection with our integration of Hillrom. From the commencement of our business optimization activities in the second half of 2015 through March 31, 2022, we have incurred cumulative pre-tax costs of $1.3 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax costs of approximately $25 million through the completion of the initiatives that are currently underway, primarily related to implementation costs. We continue to pursue cost savings initiatives and, to the extent further cost savings opportunities are identified, we may incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three months ended March 31, 2022 and 2021, we recorded the following charges related to business optimization programs.

	Three Months Ended March 31,
(in millions)	2022		2021
Restructuring charges	$	67	$	25
Costs to implement business optimization programs	14		2
Total business optimization charges	$	81	$	27

For segment reporting purposes, business optimization charges are unallocated expenses.

Costs to implement business optimization programs for the three months ended March 31, 2022 and 2021, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. These costs were primarily included within cost of sales and SG&A expense.

During the three months ended March 31, 2022 and 2021, we recorded the following restructuring charges.

	Three months ended March 31, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	2	$	47	$	—	$	49
Contract termination and other costs	—		12		—		12
Asset impairments	—		6		—		6
Total restructuring charges	$	2	$	65	$	—	$	67

	Three months ended March 31, 2021
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	16	$	5	$	—	$	21
Asset impairments	4		—		—		4
Total restructuring charges	$	20	$	5	$	—	$	25

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The following table summarizes activity in the liability related to our restructuring initiatives.

(in millions)
Liability balance as of December 31, 2021	$	109
Charges	61
Payments	(31)
Currency translation	(2)
Liability balance as of March 31, 2022	$	137

Substantially all of our restructuring liabilities as of March 31, 2022 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2023.

11. PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

The following is a summary of net periodic benefit cost relating to our pension and OPEB plans.

	Three months ended March 31,
(in millions)	2022		2021
Pension benefits
Service cost	$	19	$	22
Interest cost	24		18
Expected return on plan assets	(39)		(36)
Amortization of net losses and prior service costs	12		23
Net periodic pension cost	$	16	$	27
OPEB
Interest cost	$	1	$	1
Amortization of net loss and prior service credit	(3)		(2)
Net periodic OPEB cost (income)	$	(2)	$	(1)

12. INCOME TAXES

Our effective income tax rate was 22.3% and 14.5% for the three months ended March 31, 2022 and 2021, respectively. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, increases or decreases in valuation allowances and liabilities for uncertain tax positions and excess tax benefits on stock compensation awards.

For the three months ended March 31, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to discrete tax matters in various foreign jurisdictions, of which none are individually material, and an increase in our liabilities for uncertain tax positions, partially offset by excess tax benefits on stock compensation awards and a favorable geographic earnings mix.

For the three months ended March 31, 2021, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to decreases in accrued withholding taxes in several foreign jurisdictions and a favorable geographic earnings mix.

13. EARNINGS PER SHARE

The numerator for both basic and diluted earnings per share (EPS) is net income attributable to Baxter stockholders. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method.

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The following table is a reconciliation of basic shares to diluted shares.

	Three months ended March 31,
(in millions)	2022	2021
Basic shares	503	505
Effect of dilutive securities	6	6
Diluted shares	509	511

The effect of dilutive securities includes unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs. The computation of diluted EPS excludes 4 million and 7 million equity awards for the three months ended March 31, 2022 and 2021, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 7 for additional information regarding items impacting basic and diluted shares.

14. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We operate on a global basis and are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs.

We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Chinese Renminbi, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Colombian Peso, Brazilian Real, Mexican Peso, Turkish Lira, Indian Rupee and Swedish Krona. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative instruments to further reduce the net exposure to foreign exchange risk. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from changes in foreign exchange rates. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures.

We are also exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in interest rates. Our policy is to manage interest costs using the mix of fixed- and floating-rate debt that we believe is appropriate at that time. To manage this mix in a cost-efficient manner, we periodically enter into interest rate swaps in which we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount.

We do not hold any instruments for trading purposes and none of our outstanding derivative instruments contain credit-risk-related contingent features.

All derivative instruments are generally recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value, or net investment hedges.

Cash Flow Hedges

We may use options, including collars and purchased options, forwards and cross-currency swaps to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities. We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt.

For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in AOCI and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted intra-company sales denominated in foreign currencies and forecasted interest payments on anticipated issuances of debt, respectively.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $402 million and $377 million as of March 31, 2022 and December 31, 2021, respectively. The maximum term over which we have cash flow

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hedge contracts in place related to forecasted transactions at March 31, 2022 is 12 months for foreign exchange contracts. There were no outstanding interest rate contracts designated as cash flow hedges as of March 31, 2022 and December 31, 2021.

Fair Value Hedges

We periodically use interest rate swaps to convert a portion of our fixed-rate debt into variable-rate debt. These instruments hedge our earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Changes in the fair value of hedge instruments designated as fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt.

There were no outstanding interest rate contracts designated as fair value hedges as of March 31, 2022 and December 31, 2021.

Net Investment Hedges

In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of senior notes due May 2029. We have designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI. As of March 31, 2022, we had an accumulated pre-tax unrealized translation loss in AOCI of $4 million related to the Euro-denominated senior notes.

Dedesignations

If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings.

There were no hedge dedesignations in the first three months of 2022 or 2021 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur.

If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. There were no fair value hedges terminated during the first three months of 2022 or 2021.

If we remove a net investment hedge designation, any gains or losses recognized in AOCI are not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. There were no net investment hedges terminated during the first three months of 2022 or 2021.

Undesignated Derivative Instruments

We use forward contracts to hedge earnings from the effects of foreign exchange relating to certain of our intra-company and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month.

The total notional amount of undesignated derivative instruments was $940 million as of March 31, 2022 and $851 million as of December 31, 2021.

Gains and Losses on Hedging Instruments and Undesignated Derivative Instruments

The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended March 31, 2022 and

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2021.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2022		2021			2022		2021
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(1)	$	(1)
Foreign exchange contracts	(3)		4		Cost of sales	2		(10)
Net investment hedges	42		114		Other (income) expense, net	—		—
Total	$	39	$	118		$	1	$	(11)

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2022		2021
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	3	$	(22)

As of March 31, 2022, $5 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings.

Derivative Assets and Liabilities

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2022.

	Derivatives in asset positions			Derivatives in liability positions
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value
Derivative instruments designated as hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	12	Accrued expenses and other current liabilities	$	2
Total derivative instruments designated as hedges		12			2
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	4		Accrued expenses and other current liabilities	5
Total derivative instruments		$	16		$	7

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2021.

	Derivatives in asset positions			Derivatives in liability positions
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value
Derivative instruments designated as hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	6	Accrued expenses and other current liabilities	$	3
Total derivative instruments designated as hedges		6			3
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	2		Accrued expenses and other current liabilities	2
Total derivative instruments		$	8		$	5

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While some of our derivatives are subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets. Additionally, we are not required to post collateral for any of our outstanding derivatives.

The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.

	March 31, 2022				December 31, 2021
(in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheets	$	16	$	7	$	8	$	5
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(3)		(3)		(2)		(2)
Total	$	13	$	4	$	6	$	3

The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges:

	Carrying amount of hedged item				Cumulative amount of fair value hedging adjustment included  in the carrying amount of the hedged item (a)
(in millions)	Balance as of March 31, 2022		Balance as of December 31, 2021		Balance as of March 31, 2022		Balance as of December 31, 2021
Long-term debt	$	101	$	101	$	4	$	4

(a) These fair value hedges were terminated in 2018 and earlier periods.

15. FAIR VALUE MEASUREMENTS

The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.

			Basis of fair value measurement
(in millions)	Balance as of March 31, 2022		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	16	$	—	$	16	$	—
Debt securities	53		—		—		53
Marketable equity securities	8		8		—		—
Total	$	77	$	8	$	16	$	53
Liabilities
Foreign exchange contracts	$	7	$	—	$	7	$	—
Contingent payments related to acquisitions	124		—		—		124
Total	$	131	$	—	$	7	$	124

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			Basis of fair value measurement
(in millions)	Balance as of December 31, 2021		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	8	$	—	$	8	$	—
Debt securities	30		—		—		30
Marketable equity securities	10		10		—		—
Total	$	48	$	10	$	8	$	30
Liabilities
Foreign exchange contracts	$	5	$	—	$	5	$	—
Contingent payments related to acquisitions	143		—		—		143
Total	$	148	$	—	$	5	$	143

As of March 31, 2022 and December 31, 2021, cash and cash equivalents of $2.3 billion and $3.0 billion, respectively, included money market and other short-term funds of approximately $426 million and $816 million, respectively, which are considered Level 2 in the fair value hierarchy.

For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility.

Debt securities, which consist of convertible debt and convertible redeemable preferred shares issued by nonpublic entities, are measured using discounted cash flow and option pricing models. Those debt securities are classified as Level 3 fair value measurements when there are no observable transactions near the balance sheet date due to the lack of observable data over certain fair value inputs such as equity volatility. The fair values of debt securities increase when interest rates decrease, equity volatility increases, or the fair values of the equity shares underlying the conversion options increase.

Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and debt securities.

	Three months ended March 31,
	2022				2021
(in millions)	Contingent payments related to acquisitions		Debt securities		Contingent payments related to acquisitions
Fair value at beginning of period	$	143	$	30	$	30
Additions	—		21		24
Change in fair value recognized in earnings	(17)		—		—
Change in fair value recognized in AOCI	—		2		—
Payments	(2)		—		(16)
Fair value at end of period	$	124	$	53	$	38

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Financial Instruments Not Measured at Fair Value

In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of March 31, 2022 and December 31, 2021.

	Book values				Fair values(a)
(in millions)	2022		2021		2022		2021
Liabilities
Short-term debt	$	200	$	301	$	200	$	301
Current maturities of long-term debt and finance lease obligations	209		210		209		212
Long-term debt and finance lease obligations	16,765		17,149		16,221		17,568

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments, such as accounts receivable and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities.

Equity investments not measured at fair value are comprised of other equity investments without readily determinable fair values and were $110 million at March 31, 2022 and $114 million at December 31, 2021. Those investments are included in Other non-current assets on our condensed consolidated balance sheets.

16. SEGMENT INFORMATION

We manage our business based on four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a new global segment for the acquired Hillrom business. The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space.

We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation.

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, certain product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments). For the period from our acquisition of Hillrom on December 13, 2021 through December 31, 2021, we previously included all costs incurred by the Hillrom business within that segment, including the types of costs described in the preceding sentence that are maintained at Corporate for our legacy Baxter segments. In connection with our ongoing integration activities, beginning in the first quarter 2022, we have updated the measure of profitability for our Hillrom segment by excluding such unallocated costs, consistent with our legacy Baxter segments. Those unallocated costs related to Hillrom, which totaled $219 million for the three months ended March 31, 2022, are now presented within Corporate as well.

Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment.

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Financial information for our segments is as follows.

	Three months ended March 31,
(in millions)	2022		2021
Net sales:
Americas	$	1,626	$	1,560
EMEA	699		738
APAC	627		648
Hillrom	755		—
Total net sales	$	3,707	$	2,946
Operating income:
Americas	$	610	$	599
EMEA	119		135
APAC	151		138
Hillrom	200		—
Total segment operating income	$	1,080	$	872

The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income.

	Three months ended March 31,
(in millions)	2022		2021
Total segment operating income	$	1,080	$	872
Corporate and other	(917)		(482)
Total operating income	163		390
Interest expense, net	85		34
Other (income) expense, net	(16)		5
Income before income taxes	$	94	$	351

Refer to Note 9 for additional information on Net Sales by product category.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Refer to our Annual Report on Form 10-K for the year ended December 31, 2021, for management’s discussion and analysis of our financial condition and results of operations. The following is management’s discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2022 and 2021.

RESULTS OF OPERATIONS

Net income attributable to Baxter stockholders for the three months ended March 31, 2022 totaled $71 million, or $0.14 per diluted share, compared to $298 million, or $0.58 per diluted share, for the three months ended March 31, 2021. The first quarter of 2022 is the first full quarter reflecting Hillrom results of operations after the December 13, 2021 acquisition. Net income for the three months ended March 31, 2022 included special items which decreased net income by $400 million, or $0.79 per diluted share, respectively, as further discussed below. Net income for the three months ended March 31, 2021 included special items which decreased net income by $88 million, or $0.18 per diluted share, as further discussed below.

Special Items

The following table provides a summary of our special items and the related impact by line item on our results for the three months ended March 31, 2022 and 2021.

	Three months ended March 31,
(in millions)	2022		2021
Gross Margin
Intangible asset amortization expense	$	(122)	$	(64)
Business optimization items1	(2)		(21)
Acquisition and integration expenses2	(164)		—
European medical devices regulation3	(11)		(8)
Product-related items5	(23)		—
Total Special Items	$	(322)	$	(93)
Impact on Gross Margin Ratio	(8.6 pts)		(3.1 pts)
Selling, General and Administrative (SG&A) Expenses
Intangible asset amortization expense	$	95	$	—
Business optimization items1	78		6
Acquisition and integration expenses2	24		1
Investigation and related costs4	—		11
Total Special Items	$	197	$	18
Impact on SG&A Ratio	5.3 pts		0.6 pts
Research and Development (R&D) Expenses
Business optimization items1	$	1	$	—
Total Special Items	$	1	$	—
Impact on R&D Ratio	0.0 pts		0.0 pts
Other Operating Income, net
Acquisition and integration expenses2	(17)		—
Total Special Items	$	(17)	$	—
Income Tax Expense
Tax effects of special items6	(103)		(23)
Total Special Items	$	(103)	$	(23)
Impact on Effective Tax Rate	1.5 pts		(1.5 pts)

Intangible asset amortization expense, which increased significantly from the prior year due to the Hillrom acquisition, is identified as a special item to facilitate an evaluation of current and past operating performance and is consistent

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with how management and our Board of Directors assess performance. Additional special items are identified above because they are highly variable, difficult to predict and of a size that may substantially impact our reported results of operations for the period. Management believes that providing the separate impact of those items may provide a more complete understanding and facilitate a fuller analysis of our results of operations, particularly in evaluating performance from one period to another.

1In 2022 and 2021, our results were impacted by costs associated with our execution of programs to optimize our organization and cost structure. These actions included streamlining our international operations, rationalizing our manufacturing and distribution facilities, reducing our general and administrative infrastructure, re-aligning certain R&D activities and cancelling certain R&D programs. In the current period, restructuring charges include actions taken in connection with our integration of Hill-Rom Holdings, Inc. (Hillrom), which we acquired in December 2021. Our results in 2022 and 2021 included business optimization charges of $81 million and $27 million, respectively. Refer to Note 10 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding these charges and related liabilities.

2Our results in 2022 included $171 million of acquisition and integration-related expenses. Those costs included $188 million related to our acquisition of Hillrom, primarily reflecting $159 million of incremental cost of sales from the fair value step-ups on acquired Hillrom inventory that was sold in the current period. We do not expect to incur significant incremental cost of sales from those inventory fair value step-ups after the first quarter 2022. Other integration expenses in the current period included third party consulting costs related to our integration and related cost savings activities. Those acquisition and integration-related expenses related to Hillrom were partially offset by a $17 million benefit from a change in the estimated fair value of contingent consideration liabilities assumed in the Hillrom acquisition. Our results in 2021 included $1 million of integration expenses related to our acquisition of the rights to Caelyx and Doxil for specified territories outside of the U.S. Refer to Note 2 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding business development activities.

3Our results in 2022 and 2021 included $11 million and $8 million, respectively, related to updating our quality systems and product labeling to comply with the new medical device reporting regulation and other requirements of the European Union’s regulations for medical devices that became effective in stages beginning in 2021.

4Our results in 2021 included charges of $11 million for investigation and related cost for matters associated with our previously announced investigation of foreign exchange gains and losses. Refer to Note 6 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding the investigation.

5Our results in 2022 included charges of $23 million related to warranty and remediation activities arising from two field corrective actions on certain of our infusion pumps.

6Reflected in this item is the income tax impact of the special items identified in this table. The tax effect of each special item is based on the jurisdiction in which the item was incurred and the tax laws in effect for each such jurisdiction.

COVID-19 and Global Economic Conditions

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and continue to take. Initial measures taken in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in medical procedures in 2020. Some of these disruptions and impacts (including the suspension or postponement of elective medical procedures) in certain of our principal markets have continued into 2021 and 2022. The pandemic has created significant volatility in the demand for our products. For further discussion, refer to the Product Category Net Sales Reporting section below. Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic. For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron variants, sub variants and other virus mutations as well as vaccine distribution and hesitancy. The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees, moratoriums on elective procedures and mandatory quarantines and travel restrictions). Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility. We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the

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pandemic and other exogenous factors (including significant weather events, disruptions to certain ports of call around the world and certain geopolitical events) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods. Many of our manufacturing plant and distribution center personnel are currently unvaccinated, and we may also experience employee resistance in complying with current and future government vaccine and testing mandates, which may cause labor shortages significantly impacting manufacturing production and distribution center productivity. We expect that these challenges as well as evolving governmental restrictions and requirements, among other factors, may continue to have an adverse effect on our business.

Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. The war in Ukraine and the sanctions and other measures being imposed in response to this conflict have increased the levels of economic and political uncertainty. In response, we continue to monitor the developing situation with respect to ongoing business in Russia and are working on appropriate contingency plans that will support our desire to serving existing, chronically ill patient populations while remaining compliant with all applicable U.S. and European Union sanctions and regulations. While Russia and Ukraine do not constitute a material portion of our business, a significant escalation or expansion of economic disruption or the conflict’s current scope could have an adverse effect on our business.

For further discussion, please refer to Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

NET SALES

	Three Months Ended March 31,				Percent change
(in millions)	2022		2021		At actual currency rates		At constant currency rates
United States	$	1,757	$	1,180	49	%	49	%
International	$	1,950	1,766		10	%	16	%
Total net sales	$	3,707	$	2,946	26	%	29	%

Our acquisition of Hillrom favorably impacted net sales by 26 percentage points during the first quarter of 2022 compared to the prior year period. Foreign currency unfavorably impacted net sales by 3 percentage points, during the first quarter of 2022 compared to the prior-year period, principally due to the strengthening of the U.S. Dollar relative to the Euro, Turkish Lira, Australian Dollar and Japanese Yen.

The comparisons presented at constant currency rates reflect local currency sales at the prior period’s foreign exchange rates. This measure provides information on the change in net sales assuming that foreign currency exchange rates had not changed between the prior and the current period. We believe that the non-GAAP measure of change in net sales at constant currency rates, when used in conjunction with the U.S. GAAP measure of change in net sales at actual currency rates, may provide a more complete understanding and facilitate a fuller analysis of our results of operations, particularly in evaluating performance from one period to another.

Product Category Net Sales Reporting

In connection with our acquisition of Hillrom, we have added three new product categories: Patient Support Systems, Front Line Care and Surgical Solutions. Following these additions, our product categories include the following:

•    Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services.

•    Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

•    Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

•    Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products.

•    Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

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•    Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

•    BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies.

•Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies.

•Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment.

•Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

•    Other includes sales of other miscellaneous product and service offerings.

The following is a summary of net sales by product category:

	Three Months Ended March 31,				Percent change
(in millions)	2022		2021		At actual currency rates		At constant currency rates
Renal Care	$	894	$	922	(3)	%	1	%
Medication Delivery	706		652		8	%	10	%
Pharmaceuticals	521		552		(6)	%	(2)	%
Clinical Nutrition	227		234		(3)	%	1	%
Advanced Surgery	228		217		5	%	8	%
Acute Therapies	188		207		(9)	%	(7)	%
BioPharma Solutions	156		135		16	%	21	%
Patient Support Systems	383		—		N/A		N/A
Front Line Care	294		—		N/A		N/A
Surgical Solutions	78		—		N/A		N/A
Other	32		27		19	%	19	%
Total Baxter	$	3,707	$	2,946	26	%	29	%

Renal Care net sales decreased 3% in the first quarter of 2022, as compared to the prior-year period. That decrease was driven by a 4% negative impact from foreign exchange rate changes, as compared to the prior-year period, and lower in-center HD sales, partially offset by global patient growth in PD.

Medication Delivery net sales increased 8% in the first quarter of 2022, as compared to the prior-year period. That increase was driven by increased demand for IV administration sets and solutions, reflecting a recovery in hospital admission rates and elective surgeries, and by lower U.S. customer rebates in the current year period. Those items were partially offset by a 2% negative impact from foreign exchange rates as compared to the prior-year period.

Pharmaceuticals net sales decreased 6% in the first quarter of 2022, as compared to the prior-year period. That decrease was primarily driven by a 4% negative impact from foreign exchange rates, as compared to the prior-year period. Additionally, pharmaceuticals net sales were adversely impacted by new market entrants increasing competition for certain molecules and due to supply constraints driven, in part, by labor shortages at certain of our manufacturing facilities.

Clinical Nutrition net sales decreased 3% in the first quarter of 2022, as compared to the prior-year period. That decrease was driven by a 4% negative impact from foreign exchange rate changes, as compared to the prior-year period and lower sales of vitamins resulting from supply constraints. Those decreases were partially offset by growth in the U.S. for our PN therapies and related products.

Advanced Surgery net sales increased 5% in the first quarter of 2022, as compared to the prior-year period. That increase was driven by a partial recovery in elective surgeries and benefits from competitor supply constraints. Partially offsetting that increase was a 3% negative impact from foreign exchange rates, as compared to the prior-year period.

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Acute Therapies net sales decreased 9% in the first quarter of 2022, as compared to the prior-year period. That decrease was driven by lower COVID-related demand for our CRRT systems and a 2% negative impact from foreign exchange rate changes, as compared to the prior-year period.

BioPharma Solutions net sales increased 16% in the first quarter of 2022, as compared to the prior-year period. That increase was driven by manufacturing services and supply packaging related to the production of COVID-19 vaccines on behalf of multiple pharmaceutical companies, partially offset by a 5% negative impact from foreign exchange rate changes, as compared to the prior-year period.

The Patient Support Systems, Front Line Care and Surgical Solutions product categories were added in connection with our acquisition of Hillrom.

Gross Margin and Expense Ratios

	Three months ended March 31,
	2022		% of net sales		2021		% of net sales		$ change		% change
Gross margin	$	1,348	36.4	%	$	1,145	38.9	%	$	203	17.7	%
SG&A	$	1,052	28.4	%	$	627	21.3	%	$	425	67.8	%
R&D	$	150	4.0	%	$	128	4.3	%	$	22	17.2	%

Gross Margin

The gross margin ratio was 36.4% and 38.9% in the first quarter of 2022 and 2021, respectively. The special items identified above had an unfavorable impact of approximately 8.6 and 3.1 percentage points on the gross margin ratio in the first quarter of 2022 and 2021, respectively. Refer to the Special Items caption above for additional detail.

Excluding the impact of the special items, the gross margin ratio increased in the first quarter of 2022 compared to the prior-year period. The increase was due to a favorable product mix, primarily driven by our acquisition of Hillrom, which was partially offset by higher manufacturing and supply chain costs resulting from raw materials inflation and the continuing impact of the COVID-19 pandemic.

SG&A

The SG&A expenses ratio was 28.4% and 21.3% in the first quarter of 2022 and 2021, respectively. The special items identified above had an unfavorable impact of approximately 5.3 and 0.6 percentage points on the SG&A expenses ratio in the first quarter of 2022 and 2021, respectively. Refer to the Special Items caption above for additional detail.

Excluding the impact of the special items, the SG&A expenses ratio increased in the first quarter of 2022 compared to the prior-year period primarily due to the acquisition of Hillrom and increased outbound freight costs.

R&D

The R&D expenses ratio was 4.0% and 4.3% in the first quarter of 2022 and 2021, respectively. The special items identified above had no impact on the R&D expenses ratio in the first quarter of 2022 and 2021. Refer to the Special Items caption above for additional detail.

The R&D expenses ratio decreased in the first quarter of 2022 compared to the prior-year period as a result of decreased project-related expenditures.    

Business Optimization Items

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing our manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. In the current period, restructuring charges include actions taken in connection with our integration of Hillrom. From the commencement of our business optimization actions in the second half of 2015 through March 31, 2022, we have incurred cumulative pre-tax costs of $1.3 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments, and accelerated depreciation. We currently expect to incur additional pre-tax costs of approximately $25 million through the completion of the

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initiatives that are currently underway, primarily related to implementation costs. We continue to pursue cost savings initiatives and, to the extent further cost savings opportunities are identified, we may incur additional restructuring charges and costs to implement business optimization programs in future periods. The reductions in our cost base from these actions in the aggregate are expected to provide cumulative annual pre-tax savings of more than $1.2 billion once the remaining actions are complete. The savings from these actions have reduced cost of sales, SG&A expenses, and R&D expenses. Approximately 99 percent of the expected annual pre-tax savings are expected to be realized by the end of 2022, with the remainder by the end of 2023.

Other Operating Income, Net

Other operating income, net was income of $17 million in the first quarter of 2022, which was comprised of changes in the estimated fair value of contingent consideration liabilities.

In September 2013, we entered into an agreement with Celerity Pharmaceutical, LLC (Celerity) to develop certain acute care generic injectable premix and oncolytic products through regulatory approval. We transferred our rights in these products to Celerity and Celerity assumed ownership and responsibility for development of the products. We are obligated to purchase the individual product rights from Celerity if the products obtain regulatory approval. In December 2020, we entered into an agreement with a third party to divest one of the products that is currently being developed by Celerity if that product receives regulatory approval in the U.S. and/or European Union. If regulatory approval is obtained, we would incur a loss ranging from $30 million to $60 million for the difference between our purchase price and the divestiture proceeds in connection with that transaction.

Interest Expense, Net

Interest expense, net was $85 million in the first quarter of 2022 and $34 million in the first quarter of 2021. The increase in 2022 was driven by higher average debt outstanding in connection with the Hillrom acquisition.

Other (Income) Expense, Net

Other (income) expense, net was income of $16 million and expense of $5 million in the first quarter of 2022 and 2021, respectively. The increase in the first quarter of 2022 compared to the prior year was primarily due to higher foreign exchange gains in the current-year period, higher pension benefits and an investment impairment in the prior year.

In the first quarter of 2021, we began to wind down our operations in Argentina. Upon substantial liquidation of those operations in the future, we expect to reclassify currency translation adjustments (CTA) from accumulated other comprehensive (loss) income to other (income) expense, net and recognize a non-cash charge. As of March 31, 2022, the CTA loss for our Argentina operations was in excess of $60 million.

Income Taxes

Our effective income tax rate was 22.3% and 14.5% in the first quarter 2022 and 2021, respectively. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, increases or decreases in valuation allowances and liabilities for uncertain tax positions and excess tax benefits on stock compensation awards.

For the three months ended March 31, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to discrete tax matters in various foreign jurisdictions, of which none are individually material, and an increase in our liabilities for uncertain tax positions, partially offset by excess tax benefits on stock compensation awards and a favorable geographic earnings mix.

For the three months ended March 31, 2021, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to decreases in accrued withholding taxes in several foreign jurisdictions and a favorable geographic earnings mix.

Segment Results

We manage our global operations based on four segments, consisting of the following geographic segments related to legacy Baxter business: Americas, EMEA and APAC, and a new global segment for our recently acquired Hillrom business. We use net sales and operating income on a segment basis to make resource allocation decisions and

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assess the ongoing performance of our segments. The following is a summary of financial information for our reportable segments:

	Net sales				Operating income (loss)
	Three months ended March 31,				Three months ended March 31,
(in millions)	2022		2021		2022		2021
Americas	$	1,626	$	1,560	$	610	$	599
EMEA	699		738		119		135
APAC	627		648		151		138
Hillrom	755		—		200		—
Total segments	3,707		2,946		1,080		872
Corporate and other	—		—		(917)		(482)
Total	$	3,707	$	2,946	$	163	$	390

Americas

Segment net sales and operating income were $1.6 billion and $610 million, respectively, in the first quarter of 2022 and $1.6 billion and $599 million, respectively, in the first quarter of 2021. The increase in operating profit in the first quarter was due to favorable sales performance in our BioPharma Solutions, Medication Delivery and Advanced Surgery product categories, partially offset by unfavorable performance in Pharmaceuticals and higher supply chain costs.

EMEA

Segment net sales and operating income were $699 million and $119 million, respectively, in the first quarter of 2022 and $738 million and $135 million, respectively, in the first quarter of 2021. The decrease in operating profit in the first quarter was primarily due to an unfavorable impact of foreign exchange rates on results as compared to the prior-year period and higher supply chain costs, partially offset by having a full quarter of sales from our February 2021 acquisition of the rights to Caelyx and Doxil for specified territories outside the U.S.

APAC

Segment net sales and operating income were $627 million and $151 million, respectively, in the first quarter of 2022 and $648 million and $138 million, respectively, in the first quarter of 2021. The increase in operating profit in the first quarter was due to improved gross margin, driven by a favorable product mix, and lower operating expenses, partially offset by the unfavorable impact of foreign exchange rates on results as compared to the prior year period.

Hillrom

Segment net sales and operating income were $755 million and $200 million, respectively, in the first quarter of 2022. The increase in operating profit in the first quarter was due to the acquisition of Hillrom in December 2021.

Corporate and Other

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, certain product categories support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments). For the period from our acquisition of Hillrom on December 13, 2021 through December 31, 2021, we previously included all costs incurred by the Hillrom business within that segment, including the types of costs described in the preceding sentence that are maintained at Corporate for our legacy Baxter segments. In connection with our ongoing integration activities, beginning in the first quarter 2022, we have updated the measure of profitability for our Hillrom segment by excluding such unallocated costs, consistent with our legacy Baxter segments. Those unallocated costs related to Hillrom which totaled $219 million for the three months ended March 31, 2022, are now presented within Corporate as well.

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The Corporate operating loss in the first quarter was significantly higher than the prior-year period primarily due to higher intangible asset amortization expense, acquisition and integration-related expenses and business optimization charges, all driven by the Hillrom acquisition.

LIQUIDITY AND CAPITAL RESOURCES

The following table is a summary of the statement of cash flows for the three-month periods ended March 31, 2022 and 2021.

	Three months ended March 31,
(in millions)	2022		2021
Cash flows from operations	$	208	$	377
Cash flows from investing activities	(304)		(538)
Cash flows from financing activities	(548)		(358)

Cash Flows from Operations

In the first three months of 2022, cash provided by operating activities was $208 million, as compared to cash provided by operating activities of $377 million in the first three months of 2021, a decrease of $169 million. The decrease was primarily due to a decrease in our net income in 2022 and higher annual payouts under our employee incentive compensation plans in the current year period, partially offset by favorable accounts receivable collection performance and a lower increase in inventories compared to the prior year period.

Cash Flows from Investing Activities

In the first three months of 2022, cash used for investing activities included payments for acquisitions and investments of $174 million, primarily related to our payment to acquire the rights to Zosyn, and capital expenditures of $140 million. In the first three months of 2021, cash used for investing activities included payments for acquisitions and investments of $381 million, primarily related to Caelyx and Doxil and Transderm Scop, and capital expenditures of $171 million. See Note 2 in Item 1 of this Quarterly Report on Form 10-Q for further information regarding business development activities.

Cash Flows from Financing Activities

In the first three months of 2022, cash used in financing activities included debt repayments of $404 million, dividend payments of $140 million, and a $45 million net repayment of short-term borrowings, partially offset by proceeds from stock issued under employee benefit plans of $66 million. In the first three months of 2021, cash used for financing activities included payments for treasury stock repurchases of $253 million and dividend payments of $125 million, partially offset by proceeds from stock issued under employee benefit plans of $48 million.

As authorized by the Board of Directors, we repurchase our stock depending upon our cash flows, net debt levels and market conditions. In July 2012, the Board of Directors authorized the repurchase of up to $2.0 billion of our common stock. The Board of Directors increased this authority by an additional $1.5 billion in each of November 2016 and February 2018, by an additional $2.0 billion in November 2018 and by an additional $1.5 billion in October 2020. We did not repurchase any shares under this authority in the first three months of 2022. We had $1.3 billion remaining available under this authorization as of March 31, 2022.

Credit Facilities and Access to Capital and Credit Ratings

Credit Facilities

As of March 31, 2022, our U.S. dollar-denominated revolving credit facility and Euro-denominated revolving credit facility had a maximum capacity of $2.5 billion and €200 million, respectively. There were no borrowings outstanding under these credit facilities as of March 31, 2022 or December 31, 2021.

As of March 31, 2022, we were in compliance with the financial covenants in these agreements. The non-performance of any financial institution supporting either of the credit facilities would reduce the maximum capacity of these facilities by the institution’s respective commitment.

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Access to Capital and Credit Ratings

We intend to fund short-term and long-term obligations as they mature through cash on hand, future cash flows from operations or by issuing additional debt. We had $2.3 billion of cash and cash equivalents as of March 31, 2022, with adequate cash available to meet operating requirements in each jurisdiction in which we operate. We invest our excess cash in money market and other funds and diversify the concentration of cash among different financial institutions. As of March 31, 2022, we had approximately $17.2 billion of long-term debt and finance lease obligations, including current maturities, and short-term debt. Subject to market conditions, we regularly evaluate opportunities with respect to our capital structure.

Our ability to generate cash flows from operations, issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our products or in the solvency of our customers or suppliers, deterioration in our key financial ratios or credit ratings or other significantly unfavorable changes in conditions, including global economic conditions. However, we believe we have sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support our growth objectives. There have been no changes to our investment grade credit ratings that we disclosed in our 2021 Annual Report.

LIBOR Reform

In 2017, the United Kingdom’s Financial Conduct Authority announced that after 2021 it would no longer compel banks to submit the rates required to calculate the London Interbank Offered Rate (LIBOR) and other interbank offered rates, which have been widely used as reference rates for various securities and financial contracts, including loans, debt and derivatives. This announcement indicated that the continuation of LIBOR on the current basis was not guaranteed after 2021. Regulators in the U.S. and other jurisdictions have been working to replace these rates with alternative reference interest rates that are supported by transactions in liquid and observable markets, such as the Secured Overnight Financing Rate (SOFR). In 2020, it was announced that certain U.S. dollar LIBOR tenors would not cease until 2023. Currently, our $2.5 billion U.S. dollar-denominated revolving credit facility, our €200 million Euro-denominated revolving credit facility and our $4.0 billion Term Loan Credit Agreement reference LIBOR-based rates. The discontinuation of LIBOR will require these arrangements to be modified in order to replace LIBOR with an alternative reference interest rate, which could impact our cost of funds. Our credit facilities and term loan credit agreement include provisions related to the determination of a successor LIBOR rate.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our 2021 Annual Report. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult or complex judgments by us, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2021 Annual Report. There have been no significant changes in the application of our critical accounting policies during the first three months of 2022.

RECENT ACCOUNTING PRONOUNCEMENTS

There are no accounting standards issued but not yet effective that we believe will have a material impact on our condensed consolidated financial statements.

LEGAL CONTINGENCIES

Refer to Note 6 within Item 1 for a discussion of our legal contingencies. Upon resolution of any of these uncertainties, we may incur charges in excess of presently established liabilities. While our liability in connection with certain claims cannot be estimated with any certainty, and although the resolution in any reporting period of one or more of these matters 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 these matters, litigation is inherently uncertain, excessive verdicts do occur, and we may in the future incur material judgments or enter into material settlements of claims.

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CERTAIN REGULATORY MATTERS

The U.S. Food and Drug Administration (FDA) commenced an inspection of Claris’ facilities in Ahmedabad, India in July 2017, immediately prior to the closing of our acquisition of Claris Injectables Limited (Claris). FDA completed the inspection and subsequently issued a Warning Letter based on observations identified in the 2017 inspection (Claris Warning Letter).1 Due to challenges with the ongoing COVID-19 pandemic, FDA has not yet re-inspected the facilities and management cannot speculate on when the Claris Warning Letter will be lifted. However, we are continuing to implement corrective and preventive actions to address FDA’s prior observations and other items we identified and management continues to pursue and implement other manufacturing locations, including contract manufacturing organizations, to support the production of new products for distribution in the U.S. As previously disclosed, we have secured alternative locations to produce a majority of the planned new products to be manufactured in Ahmedabad for distribution into the U.S. and are producing new products from those locations.

1 Available online at https://www.fda.gov/ICECI/EnforcementActions/WarningLetters/ucm613538.htm

FORWARD-LOOKING INFORMATION

This quarterly report on Form 10-Q includes forward-looking statements. Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. These forward-looking statements may include statements with respect to accounting estimates and assumptions, impacts of the COVID-19 pandemic, litigation-related matters including outcomes, impacts of the internal investigation related to foreign exchange gains and losses, future regulatory filings and our R&D pipeline, strategic objectives, sales from new product offerings, credit exposure to foreign governments, potential developments with respect to credit ratings, investment of foreign earnings, estimates of liabilities including those related to uncertain tax positions, contingent payments, future pension plan contributions, costs, discount rates and rates of return, our exposure to financial market volatility and foreign currency and interest rate risks, potential tax liabilities associated with the separation of our biopharmaceuticals business from our medical products businesses, the impact of competition, future sales growth, business development activities (including the acquisitions of Cheetah, Seprafilm, certain outside of the U.S. (OUS) rights to Caelyx and Doxil, full U.S. and specific OUS rights to Transderm Scop, PerClot, Hillrom and certain rights to Zosyn in the U.S. and Canada), business optimization initiatives, cost saving initiatives, future capital and R&D expenditures, future debt issuances, manufacturing expansion, the adequacy of credit facilities, tax provisions and reserves, the effective tax rate and all other statements that do not relate to historical facts.

These forward-looking statements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, current conditions, and expected future developments as well as other factors that we believe are appropriate in the circumstances. While these statements represent our judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. Whether actual future results and developments will conform to expectations and predictions is subject to a number of risks and uncertainties, including the following factors, many of which are beyond our control:

• demand for and market acceptance risks for and competitive pressures related to new and existing products (including challenges with our ability to accurately predict changing customer preferences and needs and advances in technology and the resulting impact on customer inventory levels and the impact of reduced hospital admission rates and elective surgery volumes), and the impact of those products on quality and patient safety concerns;

• product development risks, including satisfactory clinical performance and obtaining required regulatory approvals, the ability to manufacture at appropriate scale, and the general unpredictability associated with the product development cycle;

• our ability to finance and develop new products or enhancements on commercially acceptable terms or at all;

• the impact of global economic conditions (including, among other things, the ongoing war in Ukraine and the related economic sanctions being imposed globally in response to the conflict and potential trade wars) and continuing public health crises, pandemics and epidemics, such as the ongoing COVID-19 pandemic, on us and our employees, customers and suppliers, including foreign governments in countries in which we operate;

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• the continuity, availability and pricing of acceptable raw materials and component parts, and the related continuity of our manufacturing and distribution (including impacts from COVID-19) and those of our suppliers;

• inability to create additional production capacity in a timely manner or the occurrence of other manufacturing, sterilization or supply difficulties (including as a result of natural disaster, public health crises and epidemics/pandemics, regulatory actions or otherwise);

• our ability to identify business development and growth opportunities and to successfully execute on business development strategies (including the Hillrom acquisition and related integration and restructuring activities);

• product quality or patient safety issues, leading to product recalls, withdrawals, launch delays, warning letters, import bans, sanctions, seizures, litigation, or declining sales;

• breaches or failures of our information technology systems or products, including by cyber-attack, data leakage, unauthorized access or theft (as a result of increased remote working arrangements or otherwise);

• future actions of (or failures to act or delays in acting by) FDA, the European Medicines Agency or any other regulatory body or government authority (including the SEC, DOJ or the Attorney General of any State) that could delay, limit or suspend product development, manufacturing or sale or result in seizures, recalls, injunctions, monetary sanctions or criminal or civil liabilities, including the continued delay in lifting the warning letter at our Ahmedabad facility;

• failures with respect to our quality, compliance or ethics programs;

• future actions of third parties, including third-party payers and our customers and distributors (including group purchasing organizations and formed integrated delivery networks), the impact of healthcare reform and its implementation, suspension, repeal, replacement, amendment, modification and other similar actions undertaken by the United States or foreign governments, including with respect to pricing, reimbursement, taxation and rebate policies; legislation, regulation and other governmental pressures in the United States or globally, including the cost of compliance and potential penalties for purported noncompliance thereof, all of which may affect pricing, reimbursement, taxation and rebate policies of government agencies and private payers or other elements of our business, including new or amended laws, rules and regulations (such as the California Consumer Privacy Act of 2018, the European Union’s General Data Protection Regulation and proposed regulatory changes of the U.S. Department of Health and Human Services in kidney health policy and reimbursement, which may substantially change the U.S. end stage renal disease market and demand for our peritoneal dialysis products, necessitating significant multi-year capital expenditures, which are difficult to estimate in advance);

• the outcome of pending or future litigation, including the opioid litigation and current or future ethylene oxide litigation or other claims;

• failure to achieve our short- and long-term financial goals;

• the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies;

• global regulatory, trade and tax policies (including with respect to climate change and other sustainability matters);

• the ability to protect or enforce our owned or in-licensed patent or other proprietary rights (including trademarks, copyrights, trade secrets and know-how) or patents of third parties preventing or restricting our manufacture, sale or use of affected products or technology;

• the impact of any goodwill or other intangible asset impairments on our operating results;

• fluctuations in foreign exchange and interest rates;

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• any changes in law concerning the taxation of income (whether with respect to current or future tax reform), including income earned outside the United States and potential taxes associated with the Base Erosion and Anti-Abuse Tax or the Build Back Better framework;

• actions by tax authorities in connection with ongoing tax audits;

• loss of key employees, the occurrence of labor disruptions or the inability to identify and recruit new employees;

• other factors identified elsewhere in this report and other filings with the SEC, including those factors described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, all of which are available on our website.

Actual results may differ materially from those projected in the forward-looking statements. We do not undertake to update our forward-looking statements.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Currency Risk

We are primarily exposed to foreign exchange risk with respect to revenues generated outside of the United States denominated in the Euro, British Pound, Chinese Renminbi, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Colombian Peso, Brazilian Real, Mexican Peso, Indian Rupee and Swedish Krona. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative financial instruments to further reduce the net exposure to foreign exchange. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and stockholders’ equity volatility relating to foreign exchange. However, we don't hedge our entire foreign exchange exposure and are still subject to earnings and stockholders' equity volatility relating to foreign exchange risk. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures.

We use options and forwards to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities denominated in foreign currencies. The maximum term over which we have cash flow hedge contracts in place related to foreign exchange risk on forecasted transactions as of March 31, 2022 is 12 months. We also enter into derivative instruments to hedge foreign exchange risk on certain intra-company and third-party receivables and payables and debt denominated in foreign currencies.

As part of our risk-management program, we perform sensitivity analyses to assess potential changes in the fair value of our foreign exchange instruments relating to hypothetical and reasonably possible near-term movements in foreign exchange rates.

A sensitivity analysis of changes in the fair value of foreign exchange contracts outstanding as of March 31, 2022, while not predictive in nature, indicated that if the U.S. Dollar uniformly weakened by 10% against all currencies, the net pre-tax asset balance of $9 million with respect to those contracts would change by $55 million.

The sensitivity analysis model recalculates the fair value of the foreign exchange contracts outstanding as of March 31, 2022 by replacing the actual exchange rates as of March 31, 2022 with exchange rates that are 10% weaker compared to the actual exchange rates for each applicable currency. All other factors are held constant. These sensitivity analyses disregard the possibility that currency exchange rates can move in opposite directions and that gains from one currency may or may not be offset by losses from another currency. The analyses also disregard the offsetting change in value of the underlying hedged transactions and balances.

In February 2022, the three-year cumulative inflation rate in Turkey exceeded 100 percent. As a result, we will begin reporting the results of our subsidiary in that jurisdiction using highly inflationary accounting, which requires that the functional currency of the entity be changed to the reporting currency of its parent, effective April 1, 2022. We are not able to quantify the anticipated impact of that change at the present time. As of March 31, 2022, our subsidiary in Turkey had net monetary assets of $43 million.

Our subsidiary in Argentina is reported using highly inflationary accounting effective July 1, 2018. Changes in the value of the Argentine Peso applied to our peso-denominated net monetary asset positions are recorded in income at the time of the change. As of March 31, 2022, our net monetary assets denominated in Argentine Pesos are not significant.

Interest Rate and Other Risks

Refer to the caption “Interest Rate and Other Risks” in the “Financial Instrument Market Risk” section of the 2021 Annual Report. There were no significant changes during the quarter ended March 31, 2022.

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Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of March 31, 2022. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2022.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

The information in Part I, Item 1, Note 6 is incorporated herein by reference.

Item 1A. Risk Factors

We do not believe that there have been any material changes to the risk factors previously disclosed in our 2021 Annual Report.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

In July 2012, we announced that our Board of Directors authorized us to repurchase up to $2.0 billion of our common stock on the open market or in private transactions. The Board of Directors increased this authority by an additional $1.5 billion in each of November 2016 and February 2018, by an additional $2.0 billion in November 2018 and by an additional $1.5 billion in October 2020. During the first quarter of 2022, we did not repurchase any shares under this authority. We had $1.3 billion remaining under this program as of March 31, 2022. This program does not have an expiration date.

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Item 6.    Exhibits

Exhibit Index:

Exhibit Number	Description
C10.1*	Form of Performance Stock Unit Grant Agreement under Baxter International Inc. 2021 Incentive Plan
C 10.2*	Form of Restricted Stock Unit Grant Agreement under Baxter International Inc. 2021 Incentive Plan
C 10.3*	Form of Stock Option Grant Agreement under Baxter International Inc. 2021 Incentive Plan
C 10.4*	Offer Letter between Baxter Healthcare (Asia) Pte Ltd and Andrew Frye, dated July 1, 2019
C 10.5*	Equity Addendum to Offer Letter between Baxter Healthcare (Asia) Pte Ltd and Andrew Frye, dated July 1, 2019
C 10.6*	Mobility Addendum to Offer Letter between Baxter Healthcare (Asia) Pte Ltd and Andrew Frye, dated July 9, 2019
31.1*	Certification of Chief Executive Officer Pursuant to Rules 13a-14 (a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101)

_____________________________________

*    Filed herewith.

C     Management contract or compensatory plan or arrangement.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		BAXTER INTERNATIONAL INC.
		(Registrant)
Date: April 28, 2022
	By:	/s/ James K. Saccaro
		James K. Saccaro Executive Vice President and Chief Financial Officer (duly authorized officer and principal financial officer)

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EX-10.1

Exhibit 10.1

BAXTER INTERNATIONAL INC.

2021 INCENTIVE PLAN

PERFORMANCE SHARE UNIT AWARD GRANT NOTICE

Baxter International Inc., a Delaware corporation (the “Company”), pursuant to the Baxter International Inc. 2021 Incentive Plan, as may be amended from time to time (the “Plan”), hereby grants to the holder listed below (the “Participant”) the number of performance share units set forth below (the “PSUs”). The PSUs are subject to the terms and conditions set forth in this Performance Share Unit Grant Notice (the “Grant Notice”), the Performance Share Unit Award Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in the Grant Notice and the Agreement. The PSUs granted hereunder shall be designated as a Performance Compensation Award under Section 11 of the Plan.

Participant:	[•]
Participant ID:	[•]
Date of Grant:	[•]
Target Number of PSUs:	[•]
Performance Period:	[•]
Vesting Schedule:	Except as otherwise provided in the Agreement, the PSUs are subject to the three-year performance period shown above and shall vest in accordance with the terms set forth in Addendum 1 to Exhibit A following Committee certification.
Applicable Recoupment Policy:	The Incentive Compensation Recoupment Policy shall apply to Participants who are not designated officers of the Company and the Executive Compensation Recoupment Policy shall apply to all Participants who are designated officers of the Company either at the time of grant or vesting. Both polices are attached hereto as Exhibit B.

By accepting this Award electronically through the stock plan administrator’s online grant acceptance procedure, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement, and the Grant Notice. If the Participant does not accept this Award through the online acceptance process, the Participant’s Award will be canceled, and the Participant will not be entitled to any benefits from the Award or to any compensation or benefits in lieu of the canceled Award. The Participant has reviewed the Agreement, the Plan, and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement, and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, the Grant Notice, or the Agreement.

If the Participant declines the Award, the Award will be canceled, and the Participant will not be entitled to any benefits from the Award or to any compensation or benefits in lieu of the canceled Award.

EXHIBIT A

PERFORMANCE SHARE UNIT AWARD AGREEMENT

Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to the Participant the number of PSUs set forth in the Grant Notice.

ARTICLE I.

GENERAL

Section 1.1Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice. For purposes of this Agreement:

(a)“Employer” means the member of the Company Group that employs the

Participant.

(b)“Performance Period” means the three-year period beginning with the first day of

the calendar year of the Grant Date and ending on the last day of the third calendar year thereafter.

(c)“Qualifying Retirement” shall mean a Termination of a Participant who is at least 65 years of age, or at least 55 years of age with at least 10 years of active continuous service with a member of the Company Group.

Section 1.2Incorporation of Terms of Plan. The PSUs and the shares of Common Stock issued to the Participant hereunder (“Shares”) are subject to the terms and conditions set forth in this Agreement, the Grant Notice, and the Plan, which are incorporated herein by reference.

ARTICLE II.

AWARD OF PERFORMANCE SHARE UNITS

Section 2.1Award of PSUs. In consideration of the Participant’s continued employment with or service to a member of the Company Group and for other good and valuable consideration, effective as of the Date of Grant, the Company has granted to the Participant the target number of PSUs set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan, and this Agreement, subject to adjustment as provided in Section 12 of the Plan. Except as otherwise provided herein, each PSU represents the right to receive Shares in the amounts, at the times and subject to the conditions set forth herein and in Addendum 1 toExhibit A. However, unless and until the PSUs have vested and been earned in accordance with Addendum 1 to Exhibit A, the Participant will have no right to the payment of any Shares subject thereto. Prior to the actual delivery of any Shares, the PSUs will represent an unsecured obligation of the Company.

Section 2.2Vesting and Earning of PSUs. Subject to the Participant’s continued employment with or service to a member of the Company Group through the end of the Performance Period and subject to the terms of this Agreement, the PSUs shall vest on the date specified in the Grant Notice and be earned in accordance with the terms set forth in Addendum 1 to Exhibit A following Committee certification.

Section 2.3Impact of Termination on PSUs. In the event the Participant incurs a Termination prior to the end of the Performance Period, then any unvested PSUs shall be canceled and forfeited, except as may be otherwise provided herein, in the Grant Notice, by the Committee or as set forth in a written agreement between the Participant and the Company or Employer. For the avoidance of doubt, a transfer

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of employment within the Company Group will not constitute a Termination.

(a)Qualifying Retirement. In the event the Participant incurs a Termination as a result of a Qualifying Retirement for any reason other than for Cause, or by reason of the Participant’s death or Disability, then (i) if the date of such Termination is after the calendar year of the Date of Grant, the PSUs will remain eligible for payout at the end of the Performance Period on the terms (and in accordance with the timing) provided in Addendum 1 to Exhibit A and Section 2.5(a), or (ii) if the date of such Termination is in the calendar year of the Date of Grant a pro-rata portion of the unearned PSUs shall remain eligible for payout at the end of the Performance Period on the terms provided in Addendum 1 to Exhibit A and Section 2.5(a). For purposes of the foregoing, the pro-rata portion of the unearned PSUs shall be determined by multiplying (x) the Target Number of PSUs specified in the Grant Notice by (y) the percentage equal to the number of months worked in the applicable calendar year of the Date of Grant, rounded to the nearest whole month, divided by twelve (12).

(b)Death or Disability. In the event the Participant incurs a Termination as a result of the Participant’s death or Disability, any unvested PSUs shall vest immediately as follows: (i) if the date of such Termination is after the calendar year of the Date of Grant, the PSUs shall be paid out at 100% of the target PSUs awarded, or (ii) if the date of such Termination is in the calendar year of the Date of Grant, a pro-rata portion of the unearned PSUs shall immediately vest. For purposes of the foregoing, the pro-rata portion of the unearned PSUs that shall immediately vest shall be determined by multiplying (x) the Target Number of PSUs specified in the Grant Notice by (y) the percentage equal to the number of months worked in the applicable calendar year of the Date of Grant, rounded to the nearest whole month, divided by twelve (12). Settlement of the PSUs subject to vesting hereunder will occur within sixty (60) days following the Participant’s Termination due to death or Disability.

(c)All Other Terminations. In the event the Participant incurs a Termination other than as set forth in Section 2.3(a) or Section 2.3(b), except as may be otherwise provided herein or by the Committee or as set forth in a written agreement between the Participant and the Company or Employer, the Participant shall immediately forfeit any and all PSUs granted under this Agreement that have not vested or do not vest on or prior to the date on which such Termination occurs, and the Participant’s rights in any such PSUs that are not so vested shall lapse and expire.

(d)Outside the United States. For purposes of this Agreement, if the Participant is employed or providing services outside the United States, the Committee (or its delegate) may determine that the date the Participant incurs a Termination shall mean the date the Participant is no longer actively providing services to a member of the Company Group (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction in which the Participant is employed or providing services or the terms of the Participant’s employment agreement, if any) and that the Participant’s right to vest in and earn the PSUs under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction in which the Participant is employed or providing service or the terms of the Participant’s employment or service agreement, if any); the Committee (or its delegate) shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the PSUs (including whether the Participant may still be considered to be providing services while on a leave of absence).

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Section 2.4Impact of a Change in Control on PSUs. In the event of a Change in Control, the treatment of PSUs shall be governed by Section 12(b) of the Plan.

Section 2.5Settlement of PSUs.

(a)Except as otherwise provided herein, the Participant’s PSUs shall be settled in Shares (either in book-entry form or otherwise). Following the end of the Performance Period, the Committee shall certify the PSU payout, which certification shall be final and binding. Shares earned will be delivered or otherwise made available to the Participant as soon as practical after the Committee makes its determination but not later than the March 15 after the end of the Performance Period. Notwithstanding the foregoing, the Company may delay settlement of PSUs if it reasonably determines that such settlement will violate U.S. federal securities laws or any other applicable law, including non-U.S. laws, provided that such settlement shall be made at the earliest date at which the Company reasonably determines that the making of settlement will not cause such violation, as required by U.S. Treasury Regulation Section 1.409A-2(b)(7)(ii), and provided further that no settlement shall be delayed under this Section 2.5(a) if such delay will result in a violation of Code Section 409A.

(b)All distributions shall be made by the Company in the form of whole Shares. Any fractional share may be distributed in cash or, at the discretion of the Committee, withheld to account for Tax-Related Items (as defined in Section 2.7). The value of a fractional share shall be determined based on the Fair Market Value as of the date the PSUs are certified by the Committee, and if that date is not a trading day, the Fair Market Value on next trading day will be used.

(c)Notwithstanding the foregoing, if the Participant is a resident or employed outside of the United States, the Company, in its sole discretion, may settle the PSUs in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under applicable law; (ii) would require the Participant or a member of the Company Group to obtain the approval of any governmental and/or regulatory body in the Participant’s country; (iii) would result in adverse tax consequences for the Participant or a member of the Company Group; or (iv) is administratively burdensome. Alternatively, the Company, in its sole discretion, may settle the PSUs in the form of Shares but require the Participant to sell such Shares immediately or within a specified period following the Participant’s Termination (in which case, this Agreement shall give the Company authorization to issue sales instructions on the Participant’s behalf).

(d)For the avoidance of doubt, this Award represents a right to receive Shares, and not a right to receive cash, and the Company shall only be authorized to deliver cash in settlement of all or any portion of the Award under the specific circumstances contemplated above in Section 2.5(b) and Section 2.5(c) or in connection with a transaction or event contemplated by Section 12 of the Plan.

Section 2.6Conditions to Issuance of Certificates. The Company shall not be required to issue or deliver any certificate or certificates for any Shares or to cause any Shares to be held in book-entry form prior to the fulfillment of all of the following conditions: (a) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of the Shares under any U.S. state or federal law or under rulings or regulations of the U.S. Securities and Exchange Commission or other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable, (c) the obtaining of any approval or other clearance from any U.S. state or federal governmental agency or non-U.S. regulatory agency that the Committee shall, in its absolute discretion, determine to be necessary or advisable, and (d) the receipt of full payment of any applicable tax withholding in accordance with Section 2.7 by the member of the Company Group with respect to which the applicable withholding obligation arises.

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Section 2.7Tax Withholding. Notwithstanding any other provision of this Agreement:

(a)The provisions of Section 14(e) of the Plan are incorporated herein by reference and made a part hereof. The Participant acknowledges that he or she may be required to pay to the Company or, if different, the Employer, and that the Company, the Employer, or any Subsidiary shall have the right and are hereby authorized to withhold from any compensation or other amount owing to the Participant, applicable income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax- related items (including taxes that are imposed on the Company or the Employer as a result of the Participant’s participation in the Plan but are deemed by the Company or the Employer to be an appropriate charge to the Participant) (collectively, “Tax-Related Items”), with respect to any issuance, transfer, or other taxable event under this Agreement or under the Plan and to take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such Tax-Related Items. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PSUs, including, but not limited to the grant, vesting and/or settlement of the PSUs and the subsequent sale of Shares acquired upon settlement of the vested PSUs; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the PSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve a particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)The Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under the PSUs in satisfaction of any applicable tax withholding obligations, unless the Committee permits the Participant to elect to satisfy such obligations by (i) cash, wire transfer of immediately available funds or check; (ii) delivering Shares (which are not subject to any pledge or other security interest) that have been held by the Participant for not less than six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying GAAP) having a Fair Market Value equal to such withholding liability; or (iii) if approved by the Committee, by delivery of a written or electronic notice that the Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon settlement of the PSUs, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate applicable tax withholding obligations; provided that payment of such proceeds is then made to the Company upon settlement of such sale in satisfaction of the applicable tax withholding obligations. Notwithstanding the foregoing, the Participant authorizes the Company to satisfy the applicable tax withholding obligations from proceeds of the sale of Shares issuable under the PSUs through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) and/or through withholding from any cash, other securities, or other property issuable or deliverable under any Award or from any compensation or other amounts owing to the Participant. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the number of Shares that may be so withheld or surrendered shall be limited to the number of Shares that have a Fair Market Value on the date of withholding no greater than the aggregate amount of such obligations based on the maximum individual statutory withholding rates or other rates that will not have a negative accounting impact in the Participant’s applicable jurisdictions for U.S. federal, state, local and non-U.S. income tax and payroll tax purposes that are applicable to such taxable income, and the Participant is deemed to have been issued the full number of Shares subject to the vested and earned PSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items. The Participant acknowledges that, regardless of any action taken by the Company, the Employer, or any Subsidiary the ultimate liability for all Tax-Related Items, is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.

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(c)Notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any certificate representing Shares issuable with respect to the PSUs to, or to cause any such Shares to be held in book-entry form by, the Participant or the Participant’s legal representative unless and until the Participant or the Participant’s legal representative shall have paid the Tax-Related Items resulting from the grant, vesting or settlement of the PSUs or any other taxable event related to the PSUs.

Section 2.8Rights as Stockholder. Neither the Participant nor any Person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars and delivered to the Participant (including through electronic delivery to a brokerage account). Except as otherwise provided herein, after such issuance, recordation and delivery, the Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares. From and after the Date of Grant and until the earlier of (a) the time when the Shares are delivered in settlement of the PSUs and (b) the time when the Participant’s right to receive Shares in settlement of the PSUs is forfeited, on the date that the Company pays a dividend (if any) to holders of Shares generally, the Participant shall be permitted to receive additional PSUs with respect to the PSUs based on the dividends and distributions paid on Shares to the same extent as if each PSU were a Share (without adjustment prior to vesting for payment levels set forth in Addendum 1 to Exhibit A) (the “Dividend Equivalent Unit”). These additional PSUs will be accrued through the Performance Period at target performance, then adjusted (upwards or downwards, as applicable) to reflect final actual Company performance certified in accordance with Addendum 1 to Exhibit A. Such Dividend Equivalent Units (if any) shall be subject to the same terms and conditions, including payment timing, Performance Goals, vesting, and the obligation to satisfy any tax withholding obligations, in the same manner and at the same time as the PSUs to which the Dividend Equivalent Units relate or as otherwise determined by the Company. For the avoidance of doubt, Dividend Equivalent Units shall not be eligible for the crediting of dividend equivalents or otherwise.

ARTICLE III.

NATURE OF GRANT

Section 3.1     In accepting the grant of the PSUs, the Participant acknowledges, understands, and agrees that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of the PSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of an award, or benefits in lieu of an award, even if PSUs have been granted in the past;

(c)all decisions with respect to future grants of PSUs or other grants, if any, will be at the sole discretion of the Company;

(d)the Participant is voluntarily participating in the Plan;

(e)the PSUs and the Shares subject to the PSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;

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(f)the PSUs and the Shares subject to the PSUs, and the income from and value of same, are not part of normal or expected compensation for purposes of, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;

(g)unless otherwise agreed with the Company in writing, the PSUs and the Shares subject to the PSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary;

(h)the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(i)no claim or entitlement to compensation or damages shall arise from forfeiture of the PSUs resulting from the Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); and

(j)neither the Company nor the Employer shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the PSUs or of any amounts due to the Participant pursuant to the settlement of PSUs or the subsequent sale of any Shares acquired upon settlement.

ARTICLE IV.

DATA PRIVACY

The Company is processing personal data of the Participant for purposes related to Plan administration services, based on the appropriate legal basis, depending on the Participant’s country, as stipulated in the HR Privacy Notice shared with the Participant and as in force. The Company further shares such data with its affiliates or processors, as appropriate, and only on a “need to know basis”. That may also include human resources personnel, certain executives, managers, and employees at other worldwide affiliates of the Company Group, who may have access to certain of the Participant’s personal data. Some of those recipients may be located or may have relevant operations outside of the Participant’s country, such as in the United States, where the data protection laws may not provide a level of protection equivalent to the laws of the Participant’s country. The Company implements the appropriate legal, technical, and organizational measures and mechanisms in this regard.

For further information about the HR Privacy Notice and the processing of the Participant’s data in relation to the Plan, the Participant may contact local HR or send an email to: privacy@baxter.com.

ARTICLE V.

OTHER PROVISIONS

Section 5.1Administration. The Committee (and its delegates) shall have the power to interpret the Plan, the Grant Notice, and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice, and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee will be final and binding upon the Participant, the Company, and all other interested Persons. To the extent allowable pursuant to applicable law, no member of the Committee or the Board will

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be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice, or this Agreement.

Section 5.2PSUs Not Transferable. The PSUs may not be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the PSUs have been issued, and all restrictions applicable to such Shares have lapsed. No PSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding the foregoing, with the consent of the Committee, the PSUs may be transferred as described in Section 14(b)(ii) of the Plan, pursuant to any such conditions and procedures the Committee may require.

Section 5.3Adjustments. The Participant acknowledges that the PSUs and the Shares subject to the PSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12 of the Plan.

Section 5.4Cooperation; Repatriation and Compliance Obligations. The Participant agrees to cooperate with the Company and the Employer in taking any action reasonably necessary or advisable to consummate the transactions contemplated by this Agreement. Further, the Participant agrees to repatriate all payments attributable to the PSUs in accordance with local foreign exchange rules and regulations in the Participant’s country of residence (and country of employment, if different). In addition, the Participant agrees to take any and all actions, and consents to any and all actions taken by the Employer, the Company and its Subsidiaries as may be required to allow the Employer, the Company and its Subsidiaries to comply with applicable law in the Participant’s country of residence (and country of employment, if different). Finally, the Participant agrees to take any and all actions that may be required to comply with the Participant’s personal legal and tax obligations under local laws, rules, and regulations in the Participant’s country of residence (and country of employment, if different).

Section 5.5Non-U.S. Addendum. Notwithstanding any provisions in this Agreement to the contrary, the PSUs shall be subject to any special terms and conditions set forth in the Non-U.S. Addendum to this Agreement for the Participant’s country of residence (and country of employment or service, if different) (“Addendum 2”). Moreover, if the Participant relocates to another country, any special terms and conditions for such country will apply to the Participant, to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable for legal or administrative reasons (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer). The Non-U.S. Addendum (Addendum 2) constitutes part of this Agreement.

Section 5.6Notices. For the purpose of this Plan and this Agreement, notices and all other communications shall be in writing and shall be deemed to have been duly given when delivered or mailed by overnight courier or United States registered mail, return receipt requested, postage prepaid, addressed to the Plan to the General Counsel, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015, USA and to the Participant to the address set forth in the Company’s payroll records or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

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Section 5.7Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the PSUs and on any Shares acquired under the Plan, to the extent the Company determines, in its sole discretion, it is necessary or advisable in order to comply with local law, rules and regulations or to facilitate the operation and administration of the PSUs and the Plan. Such requirements may include (but are not limited to) requiring the Participant to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

Section 5.8Language. The Participant acknowledges that he or she is proficient in the English language, or has consulted with an advisor who is proficient in the English language, so as to enable the Participant to understand the provisions of this Agreement and the Plan. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Section 5.9Electronic Delivery and Acceptance. The Company, in its sole discretion, may decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

Section 5.10Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

Section 5.11Governing Law; Venue. Except to the extent preempted by US federal law, the laws of the State of Illinois, USA shall govern the interpretation, validity, administration, enforcement, and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws. For any legal action relating to this Agreement, the parties to this Agreement consent to the exclusive jurisdiction and venue of the federal courts in Chicago, Illinois.

Section 5.12Non-Competition, Non-Solicitation, and Confidentiality Agreement. Notwithstanding any other provision in this Agreement or the Plan to the contrary, any grant hereunder shall be cancelled and no Awards will vest, be settled, or be exercisable if the Participant does not accept, sign, date and return, as directed by the Company, a Non-Competition, Non-Solicitation and Confidentiality Agreement, in such form as determined by the Company, within sixty (60) days of being provided a copy of such agreement.

Section 5.13Repayment of Proceeds; Clawback and Offset Policy. The Shares underlying the PSUs and all proceeds related to such Shares are subject to the Company’s Incentive Compensation Recoupment Policy or Executive Compensation Recoupment Policy, as specified in the Grant Notice, which are attached to Grant Notice as Exhibit B.

Additionally, where applicable, if (i) the Participant’s employment with the Company Group terminates for any reason and (ii) such Participant violates (either during and/or after employment with the Company Group) the terms of the Participant’s Non-Competition, Non-Solicitation and Confidentiality Agreement as described in and required by Section 5.12, then any Awards that have not vested or are not exercisable as of the Termination date (including any Awards that would later be settled as a result of a Qualifying Retirement) shall be cancelled and shall not vest, be settled or be exercisable. Furthermore, any Awards that have vested or became exercisable within the 12 months preceding the Termination date shall be forfeited and shall be returned to the Company, and any Awards that vested after the Termination date as a result of a Qualifying Retirement shall be forfeited. If the Participant has exercised any such Awards or sold Shares underlying Awards, then the Participant shall make a cash payment to the Company in an amount equal to the amount of the net gain recognized from the exercise of such Awards or sale of such

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Shares within 30 business days of written notice by the Company to the Participant.

Section 5.14Conformity to Securities Laws. The Participant acknowledges that the Plan, the Grant Notice, and this Agreement, are intended to conform to the extent necessary with all applicable laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, and other applicable securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the PSUs are granted, only in such a manner as to conform to applicable laws. To the extent permitted by applicable laws, the Plan, the Grant Notice, and this Agreement, shall be deemed amended to the extent necessary to conform to applicable laws.

Section 5.15Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the PSUs in any material way without the prior written consent of the Participant.

Section 5.16Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in Section 5.2 of this Agreement and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

Section 5.17Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, the PSUs, the Grant Notice, and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable laws, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

Section 5.18Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee of any member of the Company Group or shall interfere with or restrict in any way the rights of any member of the Company Group, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent (i) expressly provided otherwise in a written agreement between a Member of the Company Group and the Participant or (ii) where such provisions are not consistent with applicable foreign or local laws, in which case such applicable foreign or local laws shall control.

Section 5.19Entire Agreement. The Plan, the Grant Notice, and this Agreement (including the Addenda attached hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof. Except as specifically provided in the Grant Notice or this Agreement, in the event of any inconsistency between the Plan, the Grant Notice or this Agreement, the Plan will control.

Section 5.20Code Section 409A. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith or otherwise exempt. The Company may unilaterally amend the terms of this Agreement (or the Plan) to avoid the application of, or to comply with, Code Section 409A, in a particular circumstance or as necessary or

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desirable to satisfy any of the requirements under Code Section 409A or to mitigate any additional tax, interest and/or penalties that may apply under Code Section 409A if exemption or compliance is not practicable, but the Company or the Participant shall not be under any obligation to make any such amendment. Nothing in this Agreement (or the Plan) shall provide a basis for any person to take action against the Company or any Subsidiary based on matters covered by Code Section 409A, including the tax treatment of any amount paid under the Agreement, and neither the Company nor any of its Subsidiaries shall under any circumstances have any liability to the Participant or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties or interest imposed under Code Section 409A.

Without limiting the generality of the foregoing and anything in the Agreement to the contrary notwithstanding, if PSUs payable on or by reference to the timing of the Participant’s Termination constitute non-qualified deferred compensation subject to Section 409A, as determined in the Company’s sole discretion, such PSUs shall not be paid unless and until the Participant experiences a “separation from service” (within the meaning of Code Section 409A), and if the Participant is a “specified employee” (within the meaning of Code Section 409A) as of the date of the separation from service (as determined in accordance with the methodology established by the Company as in effect on the date of Termination), shall instead be paid to the Participant on the first business day that immediately follows the earlier of (i) the date that is six (6) months following the date of the Participant’s separation from service or (ii) the date of the Participant’s death, to the extent such delayed payment is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).

Section 5.21Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

Section 5.22Limitation on the Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the PSUs.

Section 5.23Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to applicable law, each of which shall be deemed an original and all of which together shall constitute one instrument.

Section 5.24Private Offering. If the Participant is a resident outside the United States, the grant of the PSUs is not intended to be a public offering of securities in the Participant’s country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus, or other filing with the local securities authorities with respect to the grant of the PSUs unless otherwise required under local law. No employee of the Company is permitted to advise the Participant on whether the Participant should acquire Shares under the Plan or provide the Participant with any legal, tax or financial advice with respect to the grant of the PSUs. Investment in Shares involves a degree of risk. Before deciding to acquire Shares pursuant to the PSUs, the Participant should carefully consider all risk factors and tax considerations relevant to the acquisition of Shares under the Plan or the disposition of them. Further, the Participant should carefully review all of the materials related to the PSUs and the Plan, and the Participant should consult with the Participant’s personal legal, tax and financial advisors for professional advice in relation to the Participant’s personal circumstances.

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Section 5.25Exchange Control, Foreign Asset/Account and/or Tax Reporting. The Participant acknowledges that there may be certain exchange control, foreign asset/account and/or tax reporting requirements that may affect the Participant’s ability to acquire or hold Shares or cash received from participating in the Plan (including the receipt of any dividends paid on Shares and the proceeds from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or related transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of participating in the Plan to the Participant’s country within a certain time after receipt. The Participant acknowledges that it is the Participant’s responsibility to comply with such regulations and that the Participant should speak to his or her personal advisor on this matter.

Section 5.26Insider Trading/Market Abuse. The Participant may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions, including the United States, the Participant’s country and the designated broker’s country (including any Company Group securities trading policy), which may affect the Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., the PSUs) or rights linked to the value of Shares under the Plan during such times that the Participant is considered to have “inside information” regarding the Company (as defined by the laws or regulations in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant acknowledges that it is the Participant’s responsibility to comply with any applicable restrictions and that the Participant should speak to his or her personal advisor on this matter.

Section 5.27Waiver. The waiver by the Company with respect to the Participant’s (or any other participant’s) compliance of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

Section 5.28Consent and Agreement With Respect to Plan. The Participant (a) acknowledges that a copy of the Plan and the U.S. prospectus for the Plan has been available to the Participant; (b) represents that he or she has read and is familiar with the terms and provisions thereof, has had an opportunity to obtain the advice of counsel of his or her choice prior to executing this Agreement and fully understands all provisions of this Agreement and the Plan; (c) accepts the PSUs subject to all of the terms and provisions thereof; and (d) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

Company:    Participant:

By: Sven Skillrud

Title: Vice President, Total Rewards

* * * * *

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ADDENDUM 1 TO

THE PERFORMANCE SHARE UNIT AWARD AGREEMENT PERFORMANCE GOALS AND PAYOUT SCHEDULE

Capitalized terms not specifically defined herein shall have the meanings specified in the Plan, the Grant Notice and/or the Agreement.

The target number of PSUs specified in the Grant Notice will be earned one-third under Section 1 (“Total Shareholder Return”), one-third under Section 2 (“Compound Annual Growth Rate”) and the remainder under Section 3 (“Adjusted Return on Invested Capital”), as set forth below.

Section 1. Total Shareholder Return.

The PSUs earned under this Section 1 will be earned based on the rank of Baxter’s total shareholder return (“TSR”) relative to the TSR of companies in the S&P 500 Healthcare Equipment & Services Index (the “Index”), the applicable peer group selected by the Committee within the first ninety (90) days of the Performance Period set forth in the Grant Notice (the “TSR PSUs”). TSR will be measured based on the average closing stock prices over the last twenty (20) trading days of the Performance Period (plus reinvested dividends) divided by the average closing stock prices over the twenty (20) trading days prior to the beginning of the Performance Period. Any companies in the Index who are no longer publicly traded as of the end of the Performance Period will not be included in the final assessment of the results.

The TSR PSUs will pay out in Shares in a range of 0% to 200% of the number of target TSR PSUs awarded to the Participant as follows:

Baxter International Inc. TSR Percentile Rank(Relative to the Index)	Percentage of Target Grant Earned
[•] percentile or above	[•]%
[•] percentile	[•]%
[•] percentile	[•]%
Below [•] percentile	[•]%

The PSUs will pay out linearly between each set of performance data points specified. If the Company’s absolute TSR, as measured for the Performance Period, is negative, then the PSUs earned will be based on the lesser of (a) actual performance against target or (b) 100%.

Section 2. Compound Annual Growth Rate.

The PSUs earned under this Section 2 will be earned based on the Company’s Compound Annual Growth Rate (“CAGR”) performance for Net Sales (the “CAGR PSUs”) over the Performance Period. CAGR will be calculated as follows:

Net Sales for the last calendar year of the Performance Period divided by Net Sales for the calendar year immediately preceding the Date of Grant, then raising the result to an exponent of one divided by the number of calendar years within the Performance Period. Subtract one from the subsequent result to arrive at the applicable CAGR.

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For purposes of the CAGR calculation, Net Sales means net sales of the Company that shall be (a) computed on a constant currency basis using the average foreign exchange rates in each applicable jurisdiction for the calendar year immediately preceding the Date of Grant, and (b) adjusted to exclude the revenue for any business or asset acquisition or divestiture with annualized revenue of greater than $75 million at the time of the acquisition or divestiture (determined based on the trailing four quarters preceding the acquisition or divestiture date) from all periods within the Performance Period (as well as the Net Sales for the calendar year immediately preceding the Date of Grant for divestitures).

CAGR PSUs will be measured over the Performance Period, beginning with the first day of the Performance Period and ending on the last day of the Performance Period. The Committee will set a target CAGR performance within the first ninety (90) days of the Performance Period and assess performance relative to that target after the completion of the Performance Period, which shall be finalized in accordance with Section 2.5(a) of the Agreement.

CAGR PSUs will pay out in Shares in a range of 0% to 200% of the number of target CAGR PSUs awarded to the Participant as follows:

Baxter International Inc. CAGR Performance	Percentage of Target Grant Earned
[•] percent and above	[•]%
[•] percent	[•]%
[•] percent	[•]%
Below [•] percent	[•]%

CAGR PSUs will pay out linearly between each set of performance data points specified above. Section 3.    Adjusted Return on Invested Capital.

The PSUs earned under this Section 3 will be earned based on the Company’s adjusted return on invested capital (“ROIC”) performance (the “ROIC PSUs”) over the Performance Period, as specified below.

ROIC shall be calculated over the Performance Period based on each applicable individual calendar year’s adjusted operating income less adjusted income tax expense, divided by average invested capital. Average invested capital for a particular year shall be measured as the simple average of invested capital at the beginning and end of that year. For purposes of the ROIC calculation, average invested capital is defined as working capital plus the sum of net property, plant and equipment, capitalized operating leases, net intangible assets, and goodwill. Working capital shall be measured as current assets (defined as total current assets reported under U.S. GAAP less cash and cash equivalents) less current liabilities (defined as total current liabilities reported under U.S. GAAP less short-term debt and finance lease obligations and the current portion of long-term debt and finance lease obligations). Additionally, in order to present the numerator and denominator on a like-for-like basis, accrued restructuring liabilities are removed and present intangible assets are reported at cost.

For purposes of the ROIC calculation, the adjusted operating income less adjusted income tax expense from any business or asset acquisition or divestiture with annualized revenue of greater than $75 million at the time of the acquisition or divestiture (determined based on the trailing four quarters immediately preceding the acquisition or divestiture date) shall be excluded from the numerator and the average invested capital related to such acquisition or divestiture shall be excluded from the denominator.

Final ROIC performance will be calculated by first determining the annual ROIC performance for each of the three individual calendar years in the Performance Period and then determining the three-year simple average.

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The Committee will set a target ROIC performance within the first ninety (90) days of the Performance Period and assess performance relative to that target after the completion of the Performance Period, which shall be finalized in accordance with Section 2.5(a) of the Agreement.

The ROIC PSUs will pay out in Shares in a range of 0% to 200% of the number of target ROIC PSUs awarded to the Participant as follows:

Baxter International Inc. ROIC Performance	Percentage of Target Grant Earned
[•] percent and above	[•]%
[•] percent	[•]%
[•] percent	[•]%
Below [•] percent	[•]%

The ROIC PSUs will pay out linearly between each set of performance data points specified above.

The Committee shall have sole and exclusive authority and discretion to make all determinations and resolve all ambiguities, questions and disputes relating to the calculation of Performance Goals and the level of vesting and earning of the PSUs. With respect to the determination of the achievement of any of the Performance Goals and the percentage of the target grant earned, the Committee, in its discretion, may modify or adjust such performance objectives or related level of achievement in accordance with the terms of the Plan.

*    *    *    *

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ADDENDUM 2 TO

THE PERFORMANCE SHARE UNIT AWARD AGREEMENT FOR NON-U.S. PARTICIPANTS

In addition to the terms of the Plan, the Grant Notice, and the Agreement, the PSUs are subject to the following additional terms, conditions, and provisions (this “Non-U.S. Addendum”). All capitalized terms as contained in this Non-U.S. Addendum shall have the same meaning as set forth in the Plan, the Grant Notice and/or the Agreement. Pursuant to Section 5.5 of the Agreement, if the Participant transfers residence and/or employment or service to another country reflected in this Non-U.S. Addendum, the special terms, conditions and provision for such country will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms, conditions and provisions is necessary for legal or administrative reasons (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer).

AUSTRALIA

Tax Information. The Plan is a plan to which Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) (the “Act”) applies (subject to the conditions in that Act).

Australia Offer Document. This grant of PSUs is intended to comply with the provisions of the Corporations Act 2001, Australia Securities and Investments Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order CO 14/1000. Additional details are set forth in the Australia Offer Document, a copy of which is attached to the end of this section for Australia as Annex 1.

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ANNEX 1

OFFER DOCUMENT

Baxter International Inc.

2021 Incentive Plan

OFFER OF PERFORMANCE SHARE UNITS TO AUSTRALIAN RESIDENT EMPLOYEES

The Company is pleased to provide the Participant with this offer to participate in the Plan. This offer sets out information regarding the grant of PSUs to Australian resident employees of the Company and its parents, Subsidiaries and Subsidiaries (“Australian Participants”). This information is provided by the Company to ensure compliance of the Plan with Australian Securities and Investments Commission (“ASIC”) Class Order 14/1000 and relevant provisions of the Corporations Act 2001.

In addition to the information set out in the Agreement and the Non-U.S. Addendum, Australian Participants are also being provided with copies of the following documents:

(a)the Plan;

(b)the Plan prospectus; and

(c)Employee Information Supplement for Australia (collectively, the “Additional Documents”).

The Additional Documents provide further information to help Australian Participants make an informed investment decision about participating in the Plan. Neither the Plan nor the Plan prospectus is a prospectus for the purposes of the Corporations Act 2001.

Australian Participants should not rely upon any oral statements made in relation to this offer. Australian Participants should rely only upon the statements contained in the Agreement, including the Non-U.S. Addendum, and the Additional Documents when considering participation in the Plan.

Securities Law Notification. Investment in Shares involves a degree of risk. Eligible employees who elect to participate in the Plan should monitor their participation and consider all risk factors relevant to the acquisition of Shares under the Plan as set forth below and in the Additional Documents.

The information herein is general information only. It is not advice or information that takes into account Australian Participants’ objectives, financial situation and needs.

Australian Participants should consider obtaining their own financial product advice from a person who is licensed by ASIC to give such advice.

Additional Risk Factors for Australian Residents. Australian Participants should have regard to risk factors relevant to investment in securities generally and, in particular, to holding Shares. For example, the price at which an individual Share is quoted on The New York Stock Exchange (“NYSE”) may increase or decrease due to a number of factors. There is no guarantee that the price of a Share will increase. Factors that may affect the price of an individual Share include fluctuations in the domestic and international market for listed stocks, general economic conditions, including interest rates, inflation rates, commodity and oil prices, changes to government fiscal, monetary or regulatory policies, legislation or regulation, the nature

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of the markets in which the Company operates and general operational and business risks.

More information about potential factors that could affect the Company’s business and financial results will be included in the Company’s most recent Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q. Copies of these reports are available at http://www.sec.gov/, on the Company’s investor’s page at https://investor.baxter.com/investors/investor-overview/default.aspx, and upon request to the Company.

In addition, Australian Participants should be aware that the Australian dollar (“AUD”) value of any Shares acquired under the Plan will be affected by the USD/AUD exchange rate. Participation in the Plan involves certain risks related to fluctuations in this rate of exchange.

Common Stock in a U.S. Corporation. Common stock of a U.S. corporation is analogous to ordinary shares of an Australian corporation. Each holder of a Share is entitled to one vote. Dividends may be paid on the Shares out of any funds of the Company legally available for dividends at the discretion of the Board. Further, Shares are not liable to any further calls for payment of capital or for other assessment by the Company and have no sinking fund provisions, pre-emptive rights, conversion rights or redemption provisions.

Ascertaining the Market Price of Shares. Australian Participants may ascertain the current market price of an individual Share as traded on NYSE under the symbol “BAX” at: https://www.nyse.com/quote/XNYS:BAX. The AUD equivalent of that price can be obtained at: https://www.rba.gov.au/statistics/frequency/exchange-rates.html.

Please note that this is not a prediction of what the market price of the Shares will be when PSUs vest or when Shares are issued to Australian Participants (or at any other time), or of the applicable exchange rate at such time.

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BRAZIL

Compliance with the Law. By accepting the PSUs, the Participant acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items.

Nature of Grant. This provision supplements Article III (“Nature of Grant”) of the Agreement:

By accepting the PSUs, the Participant agrees that (i) the Participant is making an investment decision and

(ii)the value of the underlying Shares is not fixed and may increase or decrease over the vesting period without compensation to the Participant.

CANADA

Settlement of PSUs. This provision supplements Section 2.5(c) of the Agreement:

Notwithstanding Section 2.5(c) of the Agreement, the PSUs do not provide any right for the Participant to receive a cash payment and the PSUs will be settled only in Shares.

Forfeiture upon Termination. This provision supplements Section 2.3(d) of the Agreement:

For purposes of the PSUs, notwithstanding Section 2.3(d) of the Agreement, the Committee or its delegate may provide that the Participant’s Termination will occur as of the date the Participant is no longer actually employed or otherwise rendering services to the Service Recipient (regardless of the reason for such Termination and whether or not later found to be invalid or in breach of employment or other laws or otherwise rendering services or the terms of the Participant’s employment or other service agreement, if any). In such case, unless otherwise provided in the Agreement or extended by the Company, the Participant’s right to vest in and earn the PSUs under the Plan, if any, will terminate as of such date (the “Termination Date”). The Termination Date will not be extended by any common law notice period. Notwithstanding the foregoing, however, if applicable employment standards legislation specifically requires continued entitlement to vesting during a statutory notice period, the Participant’s right to vest in the PSUs under the Plan, if any will be allowed to continue for that minimum notice period but then immediately terminate effective as of the last day of the Participant’s minimum statutory notice period. In the event the date the Participant is no longer providing actual service cannot be reasonably determined under the terms of the Agreement and/or the Plan, the Committee or its delegate shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the PSUs (including whether the Participant may still be considered to be providing services while on a leave of absence). Unless the applicable employment standards legislation specifically requires, in the case of the Participant, the Participant will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which his service relationship is terminated (as determined under this provision) nor will the Participant be entitled to any compensation for lost vesting.

Securities Law Notification. The Participant may not be permitted to sell within Canada Shares acquired under the Plan. The Participant may only be permitted to sell or dispose of any Shares acquired under the Plan if such sale or disposal takes place outside of Canada through the facilities of a stock exchange on which the Shares are listed (i.e., the New York Stock Exchange).

CHINA

The following provisions apply only to the Participants who are subject to exchange control restrictions imposed by the State Administration of Foreign Exchange (“SAFE”), as determined by the Company in its sole discretion:

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Vesting of PSUs

The Participant’s Employer must be registered with SAFE prior to settlement of the PSUs. If the Company is unable to obtain registration approval or is required to obtain further approvals on behalf of a member of the Company Group, the vesting or settlement of the PSUs may be suspended or delayed. Further, the Company is under no obligation to vest the PSUs and/or issue Shares if the Company’s SAFE approval becomes invalid or ceases to be in effect by the time the PSUs vest.

Termination

The Participant acknowledges and agrees that he or she must sell any Shares issued to him or her upon settlement of the PSUs as soon as practicable following the Participant’s Termination and in no event later than six (6) months following the Participant’s Termination. The Participant agrees that if he or she continues to hold any of such Shares after this time, the Shares may be sold by the Company’s designated broker on the Participant’s behalf at the instruction of the Corporation. Therefore, by accepting the PSUs, the Participant understands and agrees that the Company is authorized to, and may in its sole discretion, instruct its designated broker to assist with the mandatory sale of Shares (on the Participant’s behalf pursuant to this authorization) and that the Participant expressly authorizes the Company’s designated broker to complete the sale of such Shares. The Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the proceeds, less any Tax-Related Items and brokerage fees or commissions will be remitted to the Participant pursuant to the procedures described in the “Exchange Control Information” section below.

Exchange Control Information

Shares issued to the Participant under the Plan must be maintained in an account with E*TRADE Corporate Financial Services Inc. or such other broker as may be designated by the Company until the Shares are sold through that broker. If the Company changes its broker, the Participant acknowledges and agrees that the Company may transfer any Shares issued under the Plan to the new designated broker if necessary for legal or administrative reasons. The Participant agrees to sign any documentation necessary to facilitate the transfer. In addition, the Participant may be required to sell any Shares obtained under the Plan if the Company determines that the application of such condition is necessary or advisable for China SAFE exchange control, legal or other administrative reasons.

The Participant understands and agrees that, to facilitate compliance with exchange control requirements, the Participant will be required to immediately repatriate to China the cash proceeds from the sale of Shares acquired upon vesting of the PSUs or from any dividends. The Participant further understands that, under local law, such repatriation of the cash proceeds will be effectuated through a special exchange control account established by the Company or one of its Subsidiaries in China, and the Participant hereby consents and agrees that the cash proceeds related to the Participant’s participation in the Plan may be transferred to such special account prior to being delivered to the Participant. The Company may deliver the proceeds to the Participant in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid in U.S. dollars, the Participant understands that he or she will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are converted to local currency, there may be delays in delivering the proceeds to the Participant. The Participant agrees to bear the risk of any currency fluctuation between the time the Shares are sold, either through voluntary sale or through a mandatory sale arranged by the Company, or proceeds are otherwise realized under the Plan and the time such proceeds are distributed to the Participant through the special exchange control account.

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The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in China.

COLOMBIA

Nature of Grant.

This provision supplements Article III (“Nature of Grant”) of the Agreement:

The Participant acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the PSUs and related benefits do not constitute a component of the Participant’s “salary” for any legal purpose. Therefore, the PSUs and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amount which may be payable.

Securities Law Notification.

The Shares are not and will not be registered in the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and, therefore, the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.

HONG KONG

Important Notice.

Securities Warning: The contents of the Grant Notice, the Agreement, this Non-U.S. Addendum, the Plan, and all other materials pertaining to the PSUs and/or the Plan have not been reviewed by any regulatory authority in Hong Kong. The Participant is hereby advised to exercise caution in relation to the offer thereunder. If the Participant has any doubts about any of the contents of the aforesaid materials, the Participant should obtain independent professional advice. The PSUs and any Shares issued in respect of the PSUs do not constitute a public offering of securities under Hong Kong law and are available only to eligible employees under the Plan. The Grant Notice, the Agreement, including this Non-U.S. Addendum, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The PSUs and any documentation related thereto are intended solely for the Participant’s personal use and may not be distributed to any other person.

Lapse of Restrictions.

If, for any reason, Shares are issued to the Participant within six (6) months of the Date of Grant, the Participant agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Date of Grant.

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Settlement in Shares.

Notwithstanding anything to the contrary in this the Grant Notice, the Agreement, this Non-U.S. Addendum or the Plan, the PSUs shall be settled only in Shares (and may not be settled in cash).

SINGAPORE

Securities Law Notification.

The PSUs are being granted pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Hence, statutory liability under the SFA in relation to the content of prospectuses will not apply. The Participant should note that the PSUs are subject to section 257 of the SFA and hence the PSUs may not be offered or sold, or made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore, unless such offer, sale or invitation is made (i) more than six (6) months from the Date of Grant, (ii) pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA, or

(iii)pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.

In addition, the Participant understands that he or she is permitted to sell Shares acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside of Singapore through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange (the “NYSE”).

Director Notification Requirement.

If the Participant is a director, alternate director, substitute director or shadow director 1of a Singapore Subsidiary, the Participant must notify the Singapore Subsidiary in writing within two (2) business days of

(i) becoming the registered holder of or acquiring an interest (e.g., PSUs, Shares, etc.) in the Company or

any Subsidiary, or becoming an alternate director, substitute director or shadow director (as the case may be), whichever occurs last, or (ii) any change in a previously disclosed interest (e.g., sale of Shares). If the Participant is the chief executive officer (“CEO”) of a Singapore Subsidiary and the above notification requirements are determined to apply to the CEO of a Singapore Subsidiary, the above notification requirements also may apply to the Participant.

SPAIN

Termination and Nature of Grant.

This provision supplements Section 2.3 (“Impact of Termination on PSUs”) of the Agreement and Article III (“Nature of Grant”) of the Agreement:

In accepting the grant of PSUs, the Participant consents to participation in the Plan and acknowledges that the Participant has received a copy of the Plan.

The Participant understands and agrees that, unless otherwise provided in the Agreement, the Participant will forfeit any PSUs that have not vested as of the date the Participant’s Termination ends without

1 A shadow director is an individual who is not on the board of directors of the Singapore Subsidiary but who has sufficient control so that the board of directors of the Singapore Subsidiary acts in accordance with the directions or instructions of the individual.

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entitlement to the underlying Shares or to any amount of indemnification in the event of the Participant’s Termination for any reason including, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause (i.e., subject to a “despido improcedente”), individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment or service under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, and/or Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985.

The Participant understands that the Company has unilaterally, gratuitously and in its own discretion decided to grant PSUs under the Plan to certain individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not bind the Company or a Subsidiary, other than as set forth in the Agreement. Consequently, the Participant understands that the PSUs are granted on the assumption and condition that the PSUs and any Shares acquired upon vesting of the PSUs are not a part of any employment contract (either with the Company or a Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation), or any other right whatsoever. Further, the Participant understands that the PSUs would not be granted to the Participant but for the assumptions and conditions referred to above; thus, the Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken, or should any of the conditions not be met for any reason, any grant of or right to the PSUs shall be null and void.

Securities Law Notification.

No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory in connection with the grant of PSUs under the Plan. Neither the Plan, the Agreement (which includes this Non-U.S. Addendum), nor the Grant Notice have been nor will they be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and they do not constitute a public offering prospectus.

SWEDEN

Tax Withholding.

The following provision supplements Section 2.7 (“Tax Withholding”) of the Agreement:

Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax-Related Items as set forth in Section 2.7 of the Award Agreement, in accepting the grant of PSUs, the Participant authorizes the Company and/or the Employer to withhold Shares or to sell Shares otherwise deliverable to the Participant upon vesting/settlement to satisfy Tax-Related Items, regardless of whether the Company and/or the Employer have an obligation to withhold such Tax-Related Items.

SWITZERLAND

Securities Law Notification.

Neither this document nor any other materials relating to the PSUs constitute a prospectus according to article 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), and neither this document nor any other materials relating to the PSUs may be publicly distributed nor otherwise made publicly available in Switzerland to any person other than an employee of a member of the Company Group. Neither this document nor any other offering or marketing material relating to the PSUs have been or will be filed with,

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or approved or supervised by, any Swiss reviewing body according to article 51 FinSA or any Swiss regulatory authority (in particular, the Swiss Financial Market Supervisory Authority (FINMA)).

TAIWAN

Securities Law Notification.

The offer of participation in the Plan is available only for employees of the Company and its Subsidiaries. The offer of participation in the Plan is not a public offer of securities by a Taiwanese company.

UNITED ARAB EMIRATES

Nature of Grant.

This provision supplements Article III (“Nature of Grant”) of the Agreement:

The Participant acknowledges that the PSUs and related benefits do not constitute a component of the Participant’s “wages” for any legal purpose. Therefore, the PSUs and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as social insurance contributions and/or any other labor-related amounts which may be payable.

Securities Law Notification.

The Agreement, the Grant Notice, the Plan and other incidental communication materials concerning the PSUs are intended for distribution only to employees of the Company or its Subsidiaries. The Dubai Creative Clusters Authority (formerly known as the Dubai Technology and Media Free Zone Authority), Emirates Securities and Commodities Authority and/or the Central Bank of the United Arab Emirates has no responsibility for reviewing or verifying any documents in connection with the PSUs. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved these communications nor taken steps to verify the information set out in them, and have no responsibility for them.

Further, the Shares underlying the PSUs may be illiquid and/or subject to restrictions on their resale. The Participant should conduct his or her own due diligence on the PSUs and the Shares. If the Participant is in any doubt about any of the contents of the grant or other incidental documents, the Participant should obtain independent professional advice.

UNITED KINGDOM

Withholding. This provision supplements Section 2.7 of the Agreement:

Without limitation to Section 2.7 of the Agreement, the Participant agrees that he or she is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company or, if different, the Employer or by Her Majesty’s Revenue & Customs (“HMRC”) (or any other tax authority or any other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and, if different, the Employer against any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Participant’s behalf.

Notwithstanding the foregoing, if the Participant is a director or executive officer (within the meaning of Section 13(k) of the Exchange Act), the Participant understands that he or she may not be able to indemnify

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the Company for the amount of any income tax not collected from or paid by the Participant within ninety

(90) days of the end of the U.K. tax year in which the event giving rise to the Tax-Related Items occurs, as it may be considered to be a loan and, therefore, it may constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) may be payable. The Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company and/or the Employer (as appropriate) the amount of any NICs due on this additional benefit, which may also be recovered from the Participant by any of the means referred to in Section 2.7 of the Agreement.

*    *    *    *

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EXHIBIT B

Baxter International Inc.

Incentive Compensation Recoupment Policy

1.0    Introduction

This policy applies to all cash bonuses paid by Baxter International Inc. (the “Company”) and its subsidiaries under its 2007 Incentive Plan, or any successor Plan, and all grants of equity awarded by the Company to any person who is not designated as an officer by the Board of Directors of the Company. Cash bonuses and grants of equity made to such officers are covered by the Executive Compensation Recoupment Policy. Collectively such cash bonuses and equity awards will be referred to as “IncentiveCompensation”. Equity awards are any compensatory awards under the company’s equity compensation plans in the form of common stock or any derivative of common stock, including stock options, stock awards, restricted stock, restricted stock units, and performance share units.

2.1Triggers; Scope of Actions

2.2Following a restatement of the Company’s financial results requiring an amendment to any previously filed results, the Chairman and CEO (the “CEO”) will review the facts and circumstances that led to the requirement for the restatement and take any actions it deems appropriate with respect to Incentive Compensation. The CEO will consider whether an employee received compensation based on performance reported but not actually achieved or was accountable for the events that led to the restatement, including any misconduct.

2.3If an employee violates any of the restrictive covenants contained in any agreement between the employee and the Company, the Chairman and CEO will review the facts and circumstances related to the violation and take any actions it deems appropriate with respect to Incentive Compensation.

2.4Actions that may be taken include: recovery, reduction, or forfeiture of all or part of any Incentive Compensation previously provided or to be provided in the future; disciplinary actions; and the pursuit of any other remedies.

3.0    Documentation

This Policy will apply to Equity Plans covering any employee beginning with the Company’s 2011 Equity Plans. In addition, this Policy will be incorporated into the Company’s Management Incentive Compensation Program (MICP) beginning with the Company’s 2011 MICP, as well as any resolutions adopted by the Board or Compensation Committee as a condition to approval of the payout of any cash bonus under the 2007 Incentive Plan, or any successor Plan, beginning with the cash bonuses paid by the Company in March 2012.

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EXHIBIT B

Baxter International Inc.

Executive Compensation Recoupment Policy (As amended and restated on March 8, 2018)

1.0    Introduction

This policy (as amended and restated, this “Policy”) applies to all cash bonuses paid by Baxter International Inc. (the “Company”) under its 2007 Incentive Plan, or any successor Plan, and all grants of equity awarded by the Company to any person designated as an officer by the Board of Directors of the Company (the “Board”). Collectively such bonuses and equity awards will be referred to as “Executive Incentive Compensation”. Equity awards are any compensatory awards under the company’s equity compensation plans in the form of common stock or any derivative of common stock, including stock options, stock awards, restricted stock, restricted stock units, and performance share units. For the avoidance of doubt, this Policy shall apply to any person who is a designated officer either at the time of grant or the time of payment of the Executive Incentive Compensation.

2.1Triggers; Scope of Actions

2.2Following a restatement of the Company’s financial results requiring an amendment to any previously filed results, the Board will review the facts and circumstances that led to the requirement for the restatement and take any actions it deems appropriate with respect to Executive Incentive Compensation. The Board will consider whether an officer received compensation based on performance reported but not actually achieved or was accountable for the events that led to the restatement, including any misconduct.

2.3If an officer violates any of the restrictive covenants contained in any agreement between the officer and the Company, the Board will review the facts and circumstances related to the violation and take any actions it deems appropriate with respect to Executive Incentive Compensation.

2.4Actions the Board may take include: recovery, reduction, or forfeiture of all or part of any Executive Incentive Compensation previously provided or to be provided in the future; disciplinary actions; and the pursuit of any other remedies.

3.0    Documentation

This Policy will be incorporated into future Equity Plans covering any officer beginning with the Company’s 2009 Equity Plan as well as resolutions adopted by the Board or Compensation Committee as a condition to approval of the payout of any cash bonus under the 2007 Incentive Plan, or any successor Plan, to any officer beginning with the cash bonuses paid by the Company in March 2009. The Executive Compensation team will provide a copy of this Policy to each officer.

4.0    Disclosure

In the event the Board recoups incentive compensation under this Policy, Company management intends to disclose the aggregate amount of incentive compensation recovered under this Policy, so long as the underlying event has already been publicly disclosed publicly by the Company. This disclosure would appear in the Company’s annual proxy statement following any such Board action and would provide the aggregate amount of recovery for each event if there is more than one applicable event.

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EX-10.2

Exhibit 10.2

BAXTER INTERNATIONAL INC.
2021 INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD GRANT NOTICE

Baxter International Inc., a Delaware corporation (the “Company”), pursuant to the Baxter International Inc. 2021 Incentive Plan, as may be amended from time to time (the “Plan”), hereby grants to the holder listed below (the “Participant”) the number of Restricted Stock Units set forth below (the “RSUs”). The RSUs are subject to the terms and conditions set forth in this Restricted Stock Unit Grant Notice (the “Grant Notice”), the Restricted Stock Unit Award Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in the Grant Notice and the Agreement.

Participant:	[•]
Participant ID:	[•]
Date of Grant:	[•]
Number of RSUs:	[•]
Vesting Schedule:	[•]
Applicable Recoupment Policy:	The Incentive Compensation Recoupment Policy shall apply to Participants who are not designated officers of the Company and the Executive Compensation Recoupment Policy shall apply to all Participants who are designated officers of the Company either at the time of grant or vesting. Both polices are attached hereto as Exhibit B.

By accepting this Award electronically through the stock plan administrator’s online grant acceptance procedure, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement, and the Grant Notice. If the Participant does not accept this Award through the online acceptance process, the Participant’s Award will be canceled, and the Participant will not be entitled to any benefits from the Award or to any compensation or benefits in lieu of the canceled Award. The Participant has reviewed the Agreement, the Plan, and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement, and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, the Grant Notice, or the Agreement.

If the Participant declines the Award, the Award will be canceled, and the Participant will not be entitled to any benefits from the Award or to any compensation or benefits in lieu of the canceled Award.

EXHIBIT A

RESTRICTED STOCK UNIT AWARD AGREEMENT

Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to the Participant the number of RSUs set forth in the Grant Notice.

ARTICLE I.
GENERAL

Section 1.1Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice. For purposes of this Agreement:

(a)“Delivery Date” shall mean the date the Participant’s RSUs are settled in Shares, which shall be within a reasonable period of time following the Vesting Date and, in all cases, no later than 2 1/2 months following the applicable Vesting Date.

(b)“Employer” means the member of the Company Group that employs the Participant.

(c)“Qualifying Retirement” shall mean a Termination of a Participant who is at least 65 years of age, or at least 55 years of age with at least 10 years of active continuous service with a member of the Company Group.

(d)“Trading Day” means a date Shares are traded on the New York Stock Exchange or, if the Shares are not traded on the New York Stock Exchange, a date the Shares are traded or reported by an applicable automated quotation system or such other exchange or automated quotation system, if applicable.

(e)“Vesting Date” means the applicable date(s) when the restrictions on the RSUs lapse as provided in the Grant Notice or Section 2.3 of this Agreement. If RSUs would become earned and vested on a date that is not a Trading Day, the next Trading Day shall be the Vesting Date.

Section 1.2Incorporation of Terms of Plan. The RSUs and the shares of Common Stock issued to the Participant hereunder (“Shares”) are subject to the terms and conditions set forth in this Agreement, the Grant Notice, and the Plan, which are incorporated herein by reference.

ARTICLE II.
AWARD OF RESTRICTED STOCK UNITS

Section 2.1Award of RSUs. In consideration of the Participant’s continued employment with or service to a member of the Company Group and for other good and valuable consideration, effective as of the Date of Grant, the Company has granted to the Participant the number of RSUs set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan, and this Agreement, subject to adjustment as provided in Section 12 of the Plan. Except as otherwise provided herein, each RSU represents the right to receive one Share at the times and subject to the conditions set forth herein. However, unless and until the RSUs have vested, the Participant will have no right to the payment of any Shares subject thereto. Prior to the actual delivery of any Shares, the RSUs will represent an unsecured obligation of the Company.

Section 2.2Vesting of RSUs. Subject to the Participant’s continued employment with or service to a member of the Company Group on each applicable Vesting Date and subject to the terms of this Agreement, the RSUs shall vest in such amounts and at such times as are set forth in the Grant Notice or Section 2.3 of this Agreement.

Section 2.3Impact of Termination on RSUs. In the event the Participant incurs a Termination prior to a Vesting Date set forth in the Grant Notice, then any unvested RSUs shall be canceled and forfeited, except as may be otherwise provided herein, in the Grant Notice, by the Committee or as set forth in a written agreement between the Participant and the Company or Employer. For the avoidance of doubt, a transfer of employment within the Company Group will not constitute a Termination.

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(a)Qualifying Retirement. In the event the Participant incurs a Termination as a result of a Qualifying Retirement for any reason other than for Cause, or by reason of the Participant’s death or Disability, then (i) if the date of such Termination is after the calendar year of the Date of Grant, the RSUs will remain eligible for payout on the terms provided in the Grant Notice and Section 2.2, or (ii) if the date of such Termination is in the calendar year of the Date of Grant a pro-rata portion of the unvested RSUs shall remain eligible for payout on the terms provided in the Grant Notice and Section 2.2. For purposes of the foregoing, the pro-rata portion of the unvested RSUs shall be determined by multiplying (x) the Number of RSUs specified in the Grant Notice by (y) the percentage equal to the number of months worked in the applicable calendar year of the Date of Grant, rounded to the nearest whole month, divided by twelve (12).

(b)Death or Disability. In the event the Participant incurs a Termination as a result of the Participant’s death or Disability, any unvested RSUs shall vest as follows: (i) if the date of such Termination is after the calendar year of the Date of Grant, all unvested RSUs shall immediately vest, or (ii) if the date of such Termination is in the calendar year of the Date of Grant, a pro-rata portion of the unvested RSUs shall immediately vest. For purposes of the foregoing, the pro-rata portion of the unvested RSUs that shall immediately vest shall be determined by multiplying (x) the Number of RSUs specified in the Grant Notice by (y) the percentage equal to the number of months worked in the applicable calendar year of the Date of Grant, rounded to the nearest whole month, divided by twelve (12).

(c)All Other Terminations. In the event the Participant incurs a Termination other than as set forth in Section 2.3(a) or Section 2.3(b), except as may be otherwise provided herein or by the Committee or as set forth in a written agreement between the Participant and the Company or Employer, the Participant shall immediately forfeit any and all RSUs granted under this Agreement that have not vested or do not vest on or prior to the date on which such Termination occurs, and the Participant’s rights in any such RSUs that are not so vested shall lapse and expire.

(d)Outside the United States. For purposes of this Agreement, if the Participant is employed or providing services outside the United States, the Committee (or its delegate) may determine that the date the Participant incurs a Termination shall mean the date the Participant is no longer actively providing services to a member of the Company Group (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction in which the Participant is employed or providing services or the terms of the Participant’s employment agreement, if any) and that the Participant’s right to vest in the RSUs under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction in which the Participant is employed or providing service or the terms of the Participant’s employment or service agreement, if any); the Committee (or its delegate) shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs (including whether the Participant may still be considered to be providing services while on a leave of absence).

Section 2.4Impact of a Change in Control on RSUs. In the event of a Change in Control, the treatment of RSUs shall be governed by Section 12(b) of the Plan.

Section 2.5Settlement of RSUs.

(a) Except as otherwise provided herein (including Section 2.7), the Participant’s RSUs shall be settled in Shares (either in book-entry form or otherwise) on the Delivery Date applicable to the vested portion of the RSUs. Notwithstanding the foregoing, the Company may delay settlement of RSUs if it reasonably determines that such settlement will violate U.S. federal securities laws or any other applicable law, including non-U.S. laws, provided that such settlement shall be made at the earliest date at which the Company reasonably determines that the making of settlement will not cause such violation, as required by U.S. Treasury Regulation Section 1.409A-2(b)(7)(ii), and provided further that no settlement shall be delayed under this Section 2.5(a) if such delay will result in a violation of Code Section 409A.

(b)All distributions shall be made by the Company in the form of whole Shares. Any fractional share may be distributed in cash or, at the discretion of the Committee, withheld to account

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for Tax-Related Items (as defined in Section 2.7). The value of a fractional share shall be determined based on the Fair Market Value as of the date(s) the RSUs vest.

(c)Notwithstanding the foregoing, if the Participant is a resident or employed outside of the United States, the Company, in its sole discretion, may settle the RSUs in the form of a cash payment to the extent settlement in Shares: (i) is prohibited under applicable law; (ii) would require the Participant or a member of the Company Group to obtain the approval of any governmental and/or regulatory body in the Participant’s country; (iii) would result in adverse tax consequences for the Participant or a member of the Company Group; or (iv) is administratively burdensome. Alternatively, the Company, in its sole discretion, may settle the RSUs in the form of Shares but require the Participant to sell such Shares immediately or within a specified period following the Participant’s Termination (in which case, this Agreement shall give the Company authorization to issue sales instructions on the Participant’s behalf).

(d)For the avoidance of doubt, this Award represents a right to receive Shares, and not a right to receive cash, and the Company shall only be authorized to deliver cash in settlement of all or any portion of the Award under the specific circumstances contemplated above in Section 2.5(b) and Section 2.5(c) or in connection with a transaction or event contemplated by Section 12 of the Plan.

Section 2.6Conditions to Issuance of Certificates. The Company shall not be required to issue or deliver any certificate or certificates for any Shares or to cause any Shares to be held in book-entry form prior to the fulfillment of all of the following conditions: (a) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of the Shares under any U.S. state or federal law or under rulings or regulations of the U.S. Securities and Exchange Commission or other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable, (c) the obtaining of any approval or other clearance from any U.S. state or federal governmental agency or non-U.S. regulatory agency that the Committee shall, in its absolute discretion, determine to be necessary or advisable, and (d) the receipt of full payment of any applicable Tax-Related Items in accordance with Section 2.7 by the member of the Company Group with respect to which the applicable withholding obligation arises.

Section 2.7Tax Withholding. Notwithstanding any other provision of this Agreement:

(a)The provisions of Section 14(e) of the Plan are incorporated herein by reference and made a part hereof. The Participant acknowledges that he or she may be required to pay to the Company or, if different, the Employer, and that the Company, the Employer, or any Subsidiary shall have the right and are hereby authorized to withhold from any compensation or other amount owing to the Participant, applicable income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (including taxes that are imposed on the Company or the Employer as a result of the Participant’s participation in the Plan but are deemed by the Company or the Employer to be an appropriate charge to the Participant) (collectively, “Tax-Related Items”), with respect to any issuance, transfer, or other taxable event under this Agreement or under the Plan and to take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such Tax-Related Items. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to the grant, vesting and/or settlement of the RSUs and the subsequent sale of Shares acquired upon settlement of the vested RSUs; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve a particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)The Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under the RSUs in satisfaction of any applicable tax withholding obligations, unless the Committee permits the Participant to elect to satisfy such obligations by (i) cash, wire transfer of

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immediately available funds or check; (ii) delivering Shares (which are not subject to any pledge or other security interest) that have been held by the Participant for not less than six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying GAAP) having a Fair Market Value equal to such withholding liability; or (iii) if approved by the Committee, by delivery of a written or electronic notice that the Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon settlement of the RSUs, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate applicable tax withholding obligations; provided that payment of such proceeds is then made to the Company upon settlement of such sale in satisfaction of the applicable tax withholding obligations. Notwithstanding the foregoing, the Participant authorizes the Company to satisfy the applicable tax withholding obligations from proceeds of the sale of Shares issuable under the RSUs through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) and/or through withholding from any cash, other securities, or other property issuable or deliverable under any Award or from any compensation or other amounts owing to the Participant. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the number of Shares that may be so withheld or surrendered shall be limited to the number of Shares that have a Fair Market Value on the date of withholding no greater than the aggregate amount of such obligations based on the maximum individual statutory withholding rates or other rates that will not have a negative accounting impact in the Participant’s applicable jurisdictions for U.S. federal, state, local and non-U.S. income tax and payroll tax purposes that are applicable to such taxable income, and the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items. The Participant acknowledges that, regardless of any action taken by the Company, the Employer, or any Subsidiary the ultimate liability for all Tax-Related Items, is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.

(c)Notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any certificate representing Shares issuable with respect to the RSUs to, or to cause any such Shares to be held in book-entry form by, the Participant or the Participant’s legal representative unless and until the Participant or the Participant’s legal representative shall have paid the Tax-Related Items resulting from the grant, vesting or settlement of the RSUs or any other taxable event related to the RSUs.

Section 2.8Rights as Stockholder. Neither the Participant nor any Person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars and delivered to the Participant (including through electronic delivery to a brokerage account). Except as otherwise provided herein, after such issuance, recordation and delivery, the Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares. From and after the Date of Grant and until the earlier of (a) the time when the Shares are delivered in settlement of the RSUs and (b) the time when the Participant’s right to receive Shares in settlement of the RSUs is forfeited, on the date that the Company pays a dividend (if any) to holders of Shares generally, the Participant shall be permitted to receive additional RSUs with respect to the RSUs based on the dividends and distributions paid on Shares to the same extent as if each RSU were a Share (the “Dividend Equivalent Units”). Such Dividend Equivalent Units (if any) shall be subject to the same terms and conditions, including payment timing, vesting and the obligation to satisfy any tax withholding obligations, in the same manner and at the same time as the RSUs to which the Dividend Equivalent Units relate. For the avoidance of doubt, Dividend Equivalent Units shall not be eligible for the crediting of dividend equivalents or otherwise.

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ARTICLE III.

NATURE OF GRANT

Section 3.1In accepting the grant of the RSUs, the Participant acknowledges, understands, and agrees that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of the RSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of an award, or benefits in lieu of an award, even if RSUs have been granted in the past;

(c)all decisions with respect to future grants of RSUs or other grants, if any, will be at the sole discretion of the Company;

(d)the Participant is voluntarily participating in the Plan;

(e)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation;

(f)the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not part of normal or expected compensation for purposes of, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;

(g)unless otherwise agreed with the Company in writing, the RSUs and the Shares subject to the RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary;

(h)the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(i)no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); and

(j)neither the Company nor the Employer shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the RSUs or of any amounts due to the Participant pursuant to the settlement of RSUs or the subsequent sale of any Shares acquired upon settlement.

ARTICLE IV.

DATA PRIVACY

The Company is processing personal data of the Participant for purposes related to Plan administration services, based on the appropriate legal basis, depending on the Participant’s country, as stipulated in the HR Privacy Notice shared with the Participant and as in force. The Company further shares such data with its affiliates or processors, as appropriate, and only on a “need to know basis”. That may also include human resources personnel, certain executives, managers, and employees at other worldwide affiliates of the Company Group, who may have access to certain of the Participant’s personal data. Some of those recipients may be located or may have relevant operations outside of the Participant’s country, such as in the United States, where the data protection laws may not provide a level of protection

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equivalent to the laws of the Participant’s country. The Company implements the appropriate legal, technical, and organizational measures and mechanisms in this regard.

For further information about the HR Privacy Notice and the processing of the Participant’s data in relation to the Plan, the Participant may contact local HR or send an email to: privacy@baxter.com.

ARTICLE V.

OTHER PROVISIONS

Section 5.1Administration. The Committee (and its delegates) shall have the power to interpret the Plan, the Grant Notice, and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice, and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee will be final and binding upon the Participant, the Company, and all other interested Persons. To the extent allowable pursuant to applicable law, no member of the Committee or the Board will be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice, or this Agreement.

Section 5.2RSUs Not Transferable. The RSUs may not be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the RSUs have been issued, and all restrictions applicable to such Shares have lapsed. No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding the foregoing, with the consent of the Committee, the RSUs may be transferred as described in Section 14(b)(ii) of the Plan, pursuant to any such conditions and procedures the Committee may require.

Section 5.3Adjustments. The Participant acknowledges that the RSUs and the Shares subject to the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12 of the Plan.

Section 5.4Cooperation; Repatriation and Compliance Obligations. The Participant agrees to cooperate with the Company and the Employer in taking any action reasonably necessary or advisable to consummate the transactions contemplated by this Agreement. Further, the Participant agrees to repatriate all payments attributable to the RSUs in accordance with local foreign exchange rules and regulations in the Participant’s country of residence (and country of employment, if different). In addition, the Participant agrees to take any and all actions, and consents to any and all actions taken by the Employer, the Company and its Subsidiaries as may be required to allow the Employer, the Company and its Subsidiaries to comply with applicable law in the Participant’s country of residence (and country of employment, if different). Finally, the Participant agrees to take any and all actions that may be required to comply with the Participant’s personal legal and tax obligations under local laws, rules, and regulations in the Participant’s country of residence (and country of employment, if different).

Section 5.5Non-U.S. Addendum. Notwithstanding any provisions in this Agreement to the contrary, the RSUs shall be subject to any special terms and conditions set forth in the Non-U.S. Addendum to this Agreement for the Participant’s country of residence (and country of employment or service, if different). Moreover, if the Participant relocates to another country, any special terms and conditions for such country will apply to the Participant, to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable for legal or administrative reasons (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer). The Non-U.S. Addendum constitutes part of this Agreement.

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Section 5.6Notices. For the purpose of the Plan and this Agreement, notices and all other communications shall be in writing and shall be deemed to have been duly given when delivered or mailed by overnight courier or United States registered mail, return receipt requested, postage prepaid (or similar foreign postal service), addressed to the Plan to the General Counsel, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015, USA and to the Participant to the address set forth in the Company’s payroll records or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

Section 5.7Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the RSUs and on any Shares acquired under the Plan, to the extent the Company determines, in its sole discretion, it is necessary or advisable in order to comply with local law, rules and regulations or to facilitate the operation and administration of the RSUs and the Plan. Such requirements may include (but are not limited to) requiring the Participant to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

Section 5.8Language. The Participant acknowledges that he or she is proficient in the English language, or has consulted with an advisor who is proficient in the English language, so as to enable the Participant to understand the provisions of this Agreement and the Plan. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Section 5.9Electronic Delivery and Acceptance. The Company, in its sole discretion, may decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

Section 5.10Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

Section 5.11Governing Law; Venue. Except to the extent preempted by US federal law, the laws of the State of Illinois, USA shall govern the interpretation, validity, administration, enforcement, and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws. For any legal action relating to this Agreement, the parties to this Agreement consent to the exclusive jurisdiction and venue of the federal courts in Chicago, Illinois.

Section 5.12Non-Competition, Non-Solicitation, and Confidentiality Agreement. Notwithstanding any other provision in this Agreement or the Plan to the contrary, if determined to be applicable to the Participant in the Company’s sole discretion, any grant hereunder shall be cancelled and no Awards will vest, be settled, or be exercisable if the Participant does not accept, sign, date and return, as directed by the Company, a Non-Competition, Non-Solicitation and Confidentiality Agreement, in such form as determined by the Company, within sixty (60) days of being provided a copy of such agreement.

Section 5.13Repayment of Proceeds; Clawback and Offset Policy. The Shares underlying the RSUs and all proceeds related to such Shares are subject to the Company’s Incentive Compensation Recoupment Policy or Executive Compensation Recoupment Policy, as specified in the Grant Notice, which are attached to the Grant Notice as Exhibit B.

Additionally, where applicable, if (i) the Participant’s employment with the Company Group terminates for any reason and (ii) such Participant violates (either during and/or after employment with the Company Group) the terms of the Participant’s Non-Competition, Non-Solicitation and Confidentiality Agreement as described in and required by Section 5.12, then any Awards that have not vested or are not exercisable as of the Termination date (including any Awards that would later be settled as a result of a Qualifying Retirement) shall be cancelled and shall not vest, be settled or be exercisable. Furthermore, any Awards that have vested or became exercisable within the 12 months preceding the

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Termination date shall be forfeited and shall be returned to the Company, and any Awards that vested after the Termination date as a result of a Qualifying Retirement shall be forfeited. If the Participant has exercised any such Awards or sold any Shares underlying Awards, then the Participant shall make a cash payment to the Company in an amount equal to the amount of the net gain recognized from the exercise of such Awards or sale of such Shares within 30 business days of written notice by the Company to the Participant.

Section 5.14Conformity to Securities Laws. The Participant acknowledges that the Plan, the Grant Notice, and this Agreement, are intended to conform to the extent necessary with all applicable laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, and other applicable securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to applicable laws. To the extent permitted by applicable laws, the Plan, the Grant Notice, and this Agreement, shall be deemed amended to the extent necessary to conform to applicable laws.

Section 5.15Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the RSUs in any material way without the prior written consent of the Participant.

Section 5.16Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in Section 5.2 of this Agreement and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

Section 5.17Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, the RSUs, the Grant Notice, and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable laws, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

Section 5.18Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee of any member of the Company Group or shall interfere with or restrict in any way the rights of any member of the Company Group, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent (i) expressly provided otherwise in a written agreement between a Member of the Company Group and the Participant or (ii) where such provisions are not consistent with applicable foreign or local laws, in which case such applicable foreign or local laws shall control.

Section 5.19Entire Agreement. The Plan, the Grant Notice, and this Agreement (including the Addenda attached hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof. Except as specifically provided in the Grant Notice or this Agreement, in the event of any inconsistency between the Plan, the Grant Notice or this Agreement, the Plan will control.

Section 5.20Code Section 409A. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith or otherwise exempt. The Company may unilaterally amend the terms of this Agreement (or the Plan) to avoid the application of, or to comply with, Code Section 409A, in a particular circumstance or as

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necessary or desirable to satisfy any of the requirements under Code Section 409A or to mitigate any additional tax, interest and/or penalties that may apply under Code Section 409A if exemption or compliance is not practicable, but the Company or the Participant shall not be under any obligation to make any such amendment. Nothing in this Agreement (or the Plan) shall provide a basis for any person to take action against the Company or any Subsidiary based on matters covered by Code Section 409A, including the tax treatment of any amount paid under the Agreement, and neither the Company nor any of its Subsidiaries shall under any circumstances have any liability to the Participant or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties or interest imposed under Code Section 409A.

Without limiting the generality of the foregoing and anything in the Agreement to the contrary notwithstanding, if RSUs payable on or by reference to the timing of the Participant’s Termination constitute non-qualified deferred compensation subject to Section 409A, as determined in the Company’s sole discretion, such RSUs shall not be paid unless and until the Participant experiences a “separation from service” (within the meaning of Code Section 409A), and if the Participant is a “specified employee” (within the meaning of Code Section 409A) as of the date of the separation from service (as determined in accordance with the methodology established by the Company as in effect on the date of Termination), shall instead be paid to the Participant on the first business day that immediately follows the earlier of (i) the date that is six (6) months following the date of the Participant’s separation from service or (ii) the date of the Participant’s death, to the extent such delayed payment is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).

Section 5.21Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

Section 5.22Limitation on the Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs.

Section 5.23Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to applicable law, each of which shall be deemed an original and all of which together shall constitute one instrument.

Section 5.24Private Offering. If the Participant is a resident outside the United States, the grant of the RSUs is not intended to be a public offering of securities in the Participant’s country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus, or other filing with the local securities authorities with respect to the grant of the RSUs unless otherwise required under local law. No employee of the Company is permitted to advise the Participant on whether the Participant should acquire Shares under the Plan or provide the Participant with any legal, tax or financial advice with respect to the grant of the RSUs. Investment in Shares involves a degree of risk. Before deciding to acquire Shares pursuant to the RSUs, the Participant should carefully consider all risk factors and tax considerations relevant to the acquisition of Shares under the Plan or the disposition of them. Further, the Participant should carefully review all of the materials related to the RSUs and the Plan, and the Participant should consult with the Participant’s personal legal, tax and financial advisors for professional advice in relation to the Participant’s personal circumstances.

Section 5.25Exchange Control, Foreign Asset/Account and/or Tax Reporting. The Participant acknowledges that there may be certain exchange control, foreign asset/account and/or tax reporting requirements that may affect the Participant’s ability to acquire or hold Shares or cash received from participating in the Plan (including the receipt of any dividends paid on Shares and the proceeds from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or related transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds

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received as a result of participating in the Plan to the Participant’s country within a certain time after receipt. The Participant acknowledges that it is the Participant’s responsibility to comply with such regulations and that the Participant should speak to his or her personal advisor on this matter.

Section 5.26Insider Trading/Market Abuse. The Participant may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions, including the United States, the Participant’s country and the designated broker’s country (including any Company Group securities trading policy), which may affect the Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., the RSUs) or rights linked to the value of Shares under the Plan during such times that the Participant is considered to have “inside information” regarding the Company (as defined by the laws or regulations in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant acknowledges that it is the Participant’s responsibility to comply with any applicable restrictions and that the Participant should speak to his or her personal advisor on this matter.

Section 5.27Waiver. The waiver by the Company with respect to the Participant’s (or any other participant’s) compliance of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

Section 5.28Consent and Agreement With Respect to Plan. The Participant (a) acknowledges that a copy of the Plan and the U.S. prospectus for the Plan has been available to the Participant; (b) represents that he or she has read and is familiar with the terms and provisions thereof, has had an opportunity to obtain the advice of counsel of his or her choice prior to executing this Agreement and fully understands all provisions of this Agreement and the Plan; (c) accepts the RSUs subject to all of the terms and provisions thereof; and (d) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

Company:                            Participant:

____________________         _____________________

By: Sven Skillrud

Title: Vice President, Total Rewards

* * * * *

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ADDENDUMTO

THE RESTRICTED STOCK UNIT AWARD AGREEMENT

FOR NON-U.S. PARTICIPANTS

In addition to the terms of the Plan, the Grant Notice, and the Agreement, the RSUs are subject to the following additional terms, conditions, and provisions (this “Non-U.S. Addendum”). All capitalized terms as contained in this Non-U.S. Addendum shall have the same meaning as set forth in the Plan, the Grant Notice and/or the Agreement. Pursuant to Section 5.5 of the Agreement, if the Participant transfers residence and/or employment or service to another country reflected in this Non-U.S. Addendum, the special terms, conditions and provision for such country will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms, conditions and provisions is necessary for legal or administrative reasons (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer).

AUSTRALIA

Tax Information. The Plan is a plan to which Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) (the “Act”) applies (subject to the conditions in that Act).

Australia Offer Document. This grant of RSUs is intended to comply with the provisions of the Corporations Act 2001, Australia Securities and Investments Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order CO 14/1000. Additional details are set forth in the Australia Offer Document, a copy of which is attached to the end of this section for Australia as Annex 1.

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ANNEX 1

OFFER DOCUMENT

Baxter International Inc.
2021 Incentive Plan

OFFER OF RESTRICTED STOCK UNITS

TO AUSTRALIAN RESIDENT EMPLOYEES

The Company is pleased to provide the Participant with this offer to participate in the Plan. This offer sets out information regarding the grant of RSUs to Australian resident employees of the Company and its parents, Subsidiaries and Subsidiaries (“Australian Participants”). This information is provided by the Company to ensure compliance of the Plan with Australian Securities and Investments Commission (“ASIC”) Class Order 14/1000 and relevant provisions of the Corporations Act 2001.

In addition to the information set out in the Agreement and the Non-U.S. Addendum, Australian Participants are also being provided with copies of the following documents:

(a)the Plan;

(b)the Plan prospectus; and

(c)Employee Information Supplement for Australia (collectively, the “Additional Documents”).

The Additional Documents provide further information to help Australian Participants make an informed investment decision about participating in the Plan. Neither the Plan nor the Plan prospectus is a prospectus for the purposes of the Corporations Act 2001.

Australian Participants should not rely upon any oral statements made in relation to this offer. Australian Participants should rely only upon the statements contained in the Agreement, including the Non-U.S. Addendum, and the Additional Documents when considering participation in the Plan.

Securities Law Notification. Investment in Shares involves a degree of risk. Eligible employees who elect to participate in the Plan should monitor their participation and consider all risk factors relevant to the acquisition of Shares under the Plan as set forth below and in the Additional Documents.

The information herein is general information only. It is not advice or information that takes into account Australian Participants’ objectives, financial situation and needs.

Australian Participants should consider obtaining their own financial product advice from a person who is licensed by ASIC to give such advice.

Additional Risk Factors for Australian Residents. Australian Participants should have regard to risk factors relevant to investment in securities generally and, in particular, to holding Shares. For example, the price at which an individual Share is quoted on The New York Stock Exchange (“NYSE”) may increase or decrease due to a number of factors. There is no guarantee that the price of a Share will increase. Factors that may affect the price of an individual Share include fluctuations in the domestic and international market for listed stocks, general economic conditions, including interest rates, inflation rates, commodity and oil prices, changes to government fiscal, monetary or regulatory policies, legislation or regulation, the nature of the markets in which the Company operates and general operational and business risks.

More information about potential factors that could affect the Company’s business and financial results will be included in the Company’s most recent Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q. Copies of these reports are available at http://www.sec.gov/, on the

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Company’s investor’s page at https://investor.baxter.com/investors/investor-overview/default.aspx, and upon request to the Company.

In addition, Australian Participants should be aware that the Australian dollar (“AUD”) value of any Shares acquired under the Plan will be affected by the USD/AUD exchange rate. Participation in the Plan involves certain risks related to fluctuations in this rate of exchange.

Common Stock in a U.S. Corporation. Common stock of a U.S. corporation is analogous to ordinary shares of an Australian corporation. Each holder of a Share is entitled to one vote. Dividends may be paid on the Shares out of any funds of the Company legally available for dividends at the discretion of the Board. Further, Shares are not liable to any further calls for payment of capital or for other assessment by the Company and have no sinking fund provisions, pre-emptive rights, conversion rights or redemption provisions.

Ascertaining the Market Price of Shares. Australian Participants may ascertain the current market price of an individual Share as traded on NYSE under the symbol “BAX” at: https://www.nyse.com/quote/XNYS:BAX. The AUD equivalent of that price can be obtained at: https://www.rba.gov.au/statistics/frequency/exchange-rates.html.

Please note that this is not a prediction of what the market price of the Shares will be on any applicable Vesting Date or when Shares are issued to Australian Participants (or at any other time), or of the applicable exchange rate at such time.

BRAZIL

Compliance with the Law. By accepting the RSUs, the Participant acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items.

Nature of Grant. This provision supplements Article III (“Nature of Grant”) of the Agreement:

By accepting the RSUs, the Participant agrees that (i) the Participant is making an investment decision and (ii) the value of the underlying Shares is not fixed and may increase or decrease over the vesting period without compensation to the Participant.

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CANADA

Settlement of RSUs. This provision supplements Section 2.5(c) of the Agreement:

Notwithstanding Section 2.5(c) of the Agreement, the RSUs do not provide any right for the Participant to receive a cash payment and the RSUs will be settled only in Shares.

Forfeiture upon Termination. This provision supplements Section 2.3(d) of the Agreement:

For purposes of the RSUs, notwithstanding Section 2.3(d) of the Agreement, the Committee or its delegate may provide that the Participant’s Termination will occur as of the date the Participant is no longer actually employed or otherwise rendering services to the Service Recipient (regardless of the reason for such Termination and whether or not later found to be invalid or in breach of employment or other laws or otherwise rendering services or the terms of the Participant’s employment or other service agreement, if any). In such case, unless otherwise provided in the Agreement or extended by the Company, the Participant’s right to vest in the RSUs under the Plan, if any, will terminate as of such date (the “Termination Date”). The Termination Date will not be extended by any common law notice period. Notwithstanding the foregoing, however, if applicable employment standards legislation specifically requires continued entitlement to vesting during a statutory notice period, the Participant’s right to vest in the RSUs under the Plan, if any will be allowed to continue for that minimum notice period but then immediately terminate effective as of the last day of the Participant’s minimum statutory notice period. In the event the date the Participant is no longer providing actual service cannot be reasonably determined under the terms of the Agreement and/or the Plan, the Committee or its delegate shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the RSUs (including whether the Participant may still be considered to be providing services while on a leave of absence). Unless the applicable employment standards legislation specifically requires, in the case of the Participant, the Participant will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which his service relationship is terminated (as determined under this provision) nor will the Participant be entitled to any compensation for lost vesting.

Securities Law Notification. The Participant may not be permitted to sell within Canada Shares acquired under the Plan. The Participant may only be permitted to sell or dispose of any Shares acquired under the Plan if such sale or disposal takes place outside of Canada through the facilities of a stock exchange on which the Shares are listed (i.e., the New York Stock Exchange).

CHILE

Securities Law Notification.

The offer of RSUs refers to securities not registered in the Registry of Securities or in the Registry of Foreign securities of the Chilean Commission for the Financial Market, and therefore: (i) the Shares shall not be subject to public offering in Chile; and (ii) the Company is not subject to the oversight of the Chilean Commission for the Financial Market nor to the continual information obligations that Chilean law and regulations require from registered issuers.

CHINA

The following provisions apply only to the Participants who are subject to exchange control restrictions imposed by the State Administration of Foreign Exchange (“SAFE”), as determined by the Company in its sole discretion:

Vesting of RSUs

The Participant’s Employer must be registered with SAFE prior to settlement of the RSUs. If the Company is unable to obtain registration approval or is required to obtain further approvals on behalf of a member of the Company Group, the vesting or settlement of the RSUs may be suspended or delayed. Further, the Company is under no obligation to vest the RSUs and/or issues Shares if the Company’s SAFE approval becomes invalid or ceases to be in effect by the time the RSUs vest.

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Termination

The Participant acknowledges and agrees that he or she must sell any Shares issued to him or her upon settlement of the RSUs as soon as practicable following the Participant’s Termination and in no event later than six (6) months following the Participant’s Termination. The Participant agrees that if he or she continues to hold any of such Shares after this time, the Shares may be sold by the Company’s designated broker on the Participant’s behalf at the instruction of the Corporation. Therefore, by accepting the RSUs, the Participant understands and agrees that the Company is authorized to, and may in its sole discretion, instruct its designated broker to assist with the mandatory sale of Shares (on the Participant’s behalf pursuant to this authorization) and that the Participant expressly authorizes the Company’s designated broker to complete the sale of such Shares. The Participant acknowledges that the Company’s designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the proceeds, less any Tax-Related Items and brokerage fees or commissions will be remitted to the Participant pursuant to the procedures described in the “Exchange Control Information” section below.

Exchange Control Information

Shares issued to the Participant under the Plan must be maintained in an account with E*TRADE Corporate Financial Services Inc. or such other broker as may be designated by the Company until the Shares are sold through that broker. If the Company changes its broker, the Participant acknowledges and agrees that the Company may transfer any Shares issued under the Plan to the new designated broker if necessary for legal or administrative reasons. The Participant agrees to sign any documentation necessary to facilitate the transfer. In addition, the Participant may be required to sell any Shares obtained under the Plan if the Company determines that the application of such condition is necessary or advisable for China SAFE exchange control, legal or other administrative reasons.

The Participant understands and agrees that, to facilitate compliance with exchange control requirements, the Participant will be required to immediately repatriate to China the cash proceeds from the sale of Shares acquired upon vesting of the RSUs or from any dividends. The Participant further understands that, under local law, such repatriation of the cash proceeds will be effectuated through a special exchange control account established by the Company or one of its Subsidiaries in China, and the Participant hereby consents and agrees that the cash proceeds related to the Participant’s participation in the Plan may be transferred to such special account prior to being delivered to the Participant. The Company may deliver the proceeds to the Participant in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid in U.S. dollars, the Participant understands that he or she will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are converted to local currency, there may be delays in delivering the proceeds to the Participant. The Participant agrees to bear the risk of any currency fluctuation between the time the Shares are sold, either through voluntary sale or through a mandatory sale arranged by the Company, or proceeds are otherwise realized under the Plan and the time such proceeds are distributed to the Participant through the special exchange control account.

The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in China.

COLOMBIA

Nature of Grant.

This provision supplements Article III (“Nature of Grant”) of the Agreement:

The Participant acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the RSUs and related benefits do not constitute a component of the Participant’s “salary” for any legal purpose. Therefore, the RSUs and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amount which may be payable.

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Securities Law Notification.

The Shares are not and will not be registered in the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and, therefore, the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.

FRANCE

Terms and Conditions.

Consent to Receive Information in English. In accepting this award, the Participant confirms having read and understood the documents relating to this grant (the Plan and this Agreement), which were provided in the English language. The Participant accepts the terms of those documents accordingly.

Consentement à recevoir des informations en anglais. En acceptant l'attribution, le participant confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan U.S. et ce Contrat d’Attribution) qui ont été communiqués en langue anglaise. Le participant accepte les termes en connaissance de cause.

The following provisions apply only if the Participant is eligible to be granted a French-qualified Restricted Stock Unit ("French-qualified RSU") under theRules of the Baxter International Inc. 2021 Incentive Plan for Stock Options and Restricted Stock Units Granted to Participants in France (the “French Sub-Plan”). If the Participant is ineligible to be granted a French-qualified RSU under the French Sub-Plan, the grant will not qualify for the special French tax and social security treatment under Sections L. 225-197-1 to L. 225-197-5 and Sections L. 22-10-59 to L. 22-10-60 of the French Commercial Code, as amended.

Type of Grant. The Restricted Stock Units are granted as French-qualified RSUs and are intended to qualify for special tax and social security treatment applicable to shares granted for no consideration under Sections L. 225-197-1 to L. 225-197-5 and Sections L. 22-10-59 to L. 22-10-60 of the French Commercial Code, as amended. The French-qualified RSUs are subject to the provisions below and the French Sub-Plan, which has been provided to the Participant and is incorporated herein. Capitalized terms below not otherwise defined in the Agreement and the Plan shall have the same definitions assigned to them in the French Sub-Plan.

Certain events may affect the status of the Restricted Stock Units as French-qualified RSUs or the underlying Shares, and the French-qualified RSUs or the underlying Shares may be disqualified in the future. The Company does not make any undertaking or representation to maintain the qualified status of the French-qualified RSUs or of the underlying Shares.

Termination Due to Death. Notwithstanding anything in the Plan or the Agreement, in the event of the Participant’s Termination due to death prior to the satisfaction of the vesting conditions set forth in the vesting schedule of the Grant Notice, any portion of the French-qualified RSUs that has not vested as of such date shall become immediately transferable to the Participant’s heirs. The Company shall issue the Shares to the Participant’s heirs, at their request, provided the heirs contact the Company and request such transfer of the Shares within six (6) months following the Participant’s death. If the Participant’s heirs do not request the issuance of the Shares underlying the French-qualified RSUs within six (6) months after the Participant’s death, the French-qualified RSUs will be forfeited. The Participant’s heirs shall not be subject to the restrictions on the transfer of Shares set forth in Section III.1(b) of the French Sub-Plan.

Non-Transferability of French-qualified RSUs. The French-qualified RSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of in any manner during the Participant’s lifetime, and upon death only in accordance with the French Sub-Plan, and only to the extent required by applicable laws (including the provisions of Sections L. 225-197-1 to L. 225-197-5 and Sections L. 22-10-59 to L. 22-10-60 of the French Commercial Code, as amended).

Minimum Vesting Period. Notwithstanding anything to the contrary in this Agreement or the Plan, save in the case of death of the Participant, the French-qualified RSUs may not be settled before the first (1st)

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annual anniversary of the Grant Date (as defined in the French Sub-Plan) or such other period as is required to comply with the minimum mandatory vesting period applicable to Shares underlying French-qualified RSUs under Section L. 225-197-1 of the French Commercial Code, as amended, or by the French Tax Code or French Social Security Code, as amended.

Mandatory Holding Period.Notwithstanding anything to the contrary in this Agreement or the Plan, any Shares issued to the Participant upon settlement of the French-qualified RSUs must be held (and cannot be sold or transferred) until the expiration of a period which can be no less than two years from the Grant Date (as defined in the French Sub-Plan), or such other period as is required to comply with the minimum mandatory holding period applicable to Shares underlying French-qualified RSUs under Section L. 225-197-1 of the French Commercial Code, as amended, or by the French Tax Code or French Social Security Code, as amended; provided that if the Participant dies or Terminates due to Disability (as defined in the French Sub-Plan), this mandatory holding period will not apply. To enforce this provision, the Company may, in its discretion, issue appropriate “stop transfer” instructions to its transfer agent or hold the Shares until the expiration of the holding period set forth above (such Shares may be held by the Company, a transfer agent designated by the Company or with a broker designated by the Company).

Closed Periods.Participant may not sell any Shares issued upon vesting of the French-qualified RSUs during certain Closed Periods, to the extent applicable to the Shares underlying the French-qualified RSUs granted by the Company, as described in the French Sub-Plan.

Holding Periods for Managing Corporate Officers. If on the Grant Date (as defined in the French Sub-Plan), Participant qualifies as a managing corporate officer under French law (“mandataires sociaux”) or any similar official capacity of the Company or a Subsidiary, the Participant may not sell 20% of the Shares acquired upon settlement of the French-qualified RSUs until the termination of such official capacity, as long as this restriction is applicable to French-qualified RSUs.

Notifications.

Foreign Asset/Account Reporting Information. If the Participant is a French resident and holds Shares outside of France or maintains a foreign bank account, the Participant is required to report such account opened, held, used or closed abroad during all or part of an applicable fiscal year to the French tax authorities when filing the Participant’s tax return.

HONG KONG

Important Notice.

Securities Warning: The contents of the Grant Notice, the Agreement, this Non-U.S. Addendum, the Plan, and all other materials pertaining to the RSUs and/or the Plan have not been reviewed by any regulatory authority in Hong Kong. The Participant is hereby advised to exercise caution in relation to the offer thereunder. If the Participant has any doubts about any of the contents of the aforesaid materials, the Participant should obtain independent professional advice. The RSUs and any Shares issued in respect of the RSUs do not constitute a public offering of securities under Hong Kong law and are available only to eligible employees under the Plan. The Grant Notice, the Agreement, including this Non-U.S. Addendum, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The RSUs and any documentation related thereto are intended solely for the Participant’s personal use and may not be distributed to any other person.

Lapse of Restrictions.

If, for any reason, Shares are issued to the Participant within six (6) months of the Date of Grant, the Participant agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Date of Grant.

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Settlement in Shares.

Notwithstanding anything to the contrary in this the Grant Notice, the Agreement, this Non-U.S. Addendum or the Plan, the RSUs shall be settled only in Shares (and may not be settled in cash).

INDONESIA

Language Consent

By accepting the RSUs, the Participant (i) confirms having read and understood the documents relating to the grant (i.e., the Plan and the Agreement) which were provided in the English language, (ii) accepts the terms of those documents accordingly, and (iii) agrees not to challenge the validity of this document based on Law No. 24 of 2009 on National Flag, Language, Coat of Arms and National Anthem or the implementing Presidential Regulation (when issued).

Persetujuan Bahasa

Dengan menerima pemberian Unit Saham Terbatas, anda (i) memberikan konfirmasi bahwa anda telah membaca dan memahami dokumen-dokumen berkaitan dengan pemberian ini (yaitu, Program dan Perjanjian) yang disediakan dalam Bahasa Inggris, (ii) menerima persyaratan di dalam dokumen-dokumen tersebut, dan (iii) setuju untuk tidak mengajukan keberatan atas keberlakuan dari dokumen ini berdasarkan Undang-Undang No. 24 Tahun 2009 tentang Bendera, Bahasa dan Lambang Negara serta Lagu Kebangsaan ataupun Peraturan Presiden sebagai pelaksanaannya (ketika diterbitkan).

ISRAEL

Settlement of RSUs.

The following provision supplements Section 2.5(c) of the Agreement:

If Shares are delivered to the Participant pursuant to Section 2.5(a) of the Agreement, the Company reserves the right to require that the Participant sell all Shares underlying the RSUs, either immediately upon receipt of such Shares or upon the Participant’s Termination, to facilitate compliance with tax withholding obligations in Israel.

In this regard, the Participant agrees that the Company is authorized to instruct its designated broker to assist with any such mandatory sale of Shares (on the Participant’s behalf pursuant to this authorization), and the Participant expressly authorizes the designated broker to complete the sale of such Shares. The Participant also agrees to sign any agreements, forms and/or consents that may be reasonably requested by the Company (or the designated broker) to effectuate the sale of the Shares and shall otherwise cooperate with the Company with respect to such matters, provided that the Participant shall not be permitted to exercise any influence over how, when or whether the sales occur. The Participant acknowledges that the designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Due to fluctuations in the Share price and/or applicable exchange rates between the date the Shares are delivered to the Participant and (if later) the date on which the Shares are sold, the amount of proceeds ultimately distributed to the Participant may be more or less than the market value of the Shares on the Vesting Date or the date the shares are delivered to the Participant.

Upon the sale of the Shares, the cash proceeds from the sale of Shares (less any applicable Tax-Related Items, brokerage fees or commissions) will be delivered to the Participant in accordance with applicable laws and regulations.

Securities Law Notification. This offer of RSUs does not constitute a public offering under the Securities Law, 1968.

ITALY

Plan Document Acknowledgment.

8

By accepting the RSUs, the Participant acknowledges that he or she has received a copy of the Plan, the Agreement and the Notice and has reviewed the Plan, the Agreement, including this Non-U.S. Addendum, and the Grant Notice in their entirety and fully understands and accepts all provisions of the Plan, the Agreement, including this Non-U.S. Addendum, and the Grant Notice.

The Participant further acknowledges that he or she has read and specifically and expressly approves the following provisions of the Agreement: (i) Impact of Termination on RSUs; (ii) Distribution or Payment of RSUs; (iii) Tax Withholding; (iv) Governing Law; Venue; (v) Electronic Delivery and Acceptance; (vi) the Nature of Grant; (vii) Data Privacy and (vii) the Vesting Schedule in the Grant Notice.

MEXICO

Plan Document Acknowledgement

By accepting the RSUs, the Participant acknowledges that he or she has received a copy of the Plan, the Grant Notice, and the Agreement, including this Non-U.S. Addendum, which the Participant has reviewed. The Participant acknowledges further that he or she accepts all the provisions of the Plan, the Grant Notice, and the Agreement, including this Non-U.S. Addendum. The Participant also acknowledges that he or she has read and specifically and expressly approves the terms and conditions set forth in Article III (“Nature of Grant”) in the Agreement, which clearly provides as follows:

(1)    The Participant’s participation in the Plan does not constitute an acquired right;

(2)    The Plan and the Participant’s participation in it are offered by the Company on a wholly discretionary basis;

(3)    The Participant’s participation in the Plan is voluntary; and

(4)    No member of the Company Group is responsible for any decrease in the value of any Shares acquired at vesting and settlement of the RSUs.

Labor Law Policy and Acknowledgment

By accepting the RSUs, the Participant expressly recognizes that the Company, with registered offices at One Baxter Parkway, Deerfield, Illinois, 60015, USA, is solely responsible for the administration of the Plan and that the Participant’s participation in the Plan and acquisition of Shares do not constitute an employment relationship between the Participant and the Company since the Participant is participating in the Plan on a wholly commercial basis and his or her sole employer is Baxter México, S. de R.L de C MEX (“Baxter Mexico”). Based on the foregoing, the Participant expressly recognizes that the Plan and the benefits that he or she may derive from participating in the Plan do not establish any rights between the Participant and the employer, Baxter Mexico, and do not form part of the employment conditions and/or benefits provided by Baxter Mexico, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Participant’s employment.

The Participant further understands that his or her participation in the Plan is as a result of a unilateral and discretionary decision of the Company; therefore, the Company reserves the absolute right to amend and/or discontinue the Participant’s participation at any time without any liability to the Participant.

Finally, the Participant hereby declares that he or she does not reserve to him- or herself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and the Participant therefore grants a full and broad release to the Company, and its subsidiaries, branches, representative offices, shareholders, directors, officers, employees, agents, or legal representatives with respect to any claim that may arise.

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Spanish Translation

Reconocimiento del Documento del Plan

Al aceptar las Unidades de Acciones Restringidas (RSUs, por sus siglas en inglés), el Participante reconoce que ha recibido una copia del Plan, el Anuncio de la Subvención y el Acuerdo, con inclusión de este Anexo A, que el Participante ha revisado. El Participante reconoce, además, que acepta todas las disposiciones del Plan, el Anuncio de la Subvención, y en el Acuerdo, incluyendo este Anexo A. El Participante también reconoce que ha leído y que concretamente aprueba de forma expresa los términos y condiciones establecidos en la Sección 1 (“Naturaleza de la Subvención”) del Acuerdo, que claramente dispone lo siguiente:

(1)    La participación del Participante en el Plan no constituye un derecho adquirido;

(2)    El Plan y la participación del Participante en el Plan se ofrecen por la Compañía en su discrecionalidad total;

(3)    Que la participación del Participante en el Plan es voluntaria; y

(4)    La Compañía y sus Empresas Matrices, Subsidiarias y Afiliadas no son responsables de ninguna disminución en el valor de las acciones adquiridas al conferir las RSUs.

Política Laboral y Reconocimiento

Al aceptar las RSUs, el Participante expresamente reconoce que la Compañía, con sus oficinas registradas y ubicadas en One Baxter Parkway, Deerfield, Illinois, 60015, USA, es la única responsable por la administración del Plan y que la participación del Participante en el Plan y en su caso la adquisición de Acciones no constituyen una relación de trabajo entre el Participante y la Compañía, ya que el Participante participa en el Plan en un marco totalmente comercial y su único patrón es Baxter México, S. de R.L de C MEX (“Baxter Mexico”). Derivado de lo anterior, el Participante expresamente reconoce que el Plan y los beneficios que pudieran derivar de la participación en el Plan no establecen derecho alguno entre el Participante y el patrón, Baxter Mexico, y no forma parte de las condiciones de trabajo y/o las prestaciones otorgadas por Baxter Mexico, y que cualquier modificación al Plan o su terminación no constituye un cambio o desmejora de los términos y condiciones de la relación de trabajo del Participante.

Asimismo, el Participante reconoce que su participación en el Plan se ha resultado de una decisión unilateral y discrecional de la Compañía; por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o terminar la participación del Participante en cualquier momento y sin responsabilidad alguna frente el Participante.

Finalmente, el Participante por este medio declara que no se reserva ninguna derecho o acción en contra de la Compañía por cualquier compensación o daños y perjuicios en relación de las disposiciones del Plan o de los beneficios derivados del Plan, y por lo tanto, el Participante otorga el más amplio finiquito que en derecho proceda a la Compañía, y sus filiales, oficinas de representación, accionistas, directores, autoridades, empleados, agentes, o representantes legales en relación con cualquier demanda que pudiera surgir.

Securities Law Notification.

The RSUs granted, and any Shares acquired, under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the RSUs may not be publicly distributed in Mexico. These materials are addressed to the Participant because of the Participant’s existing relationship with the Company and any Subsidiary, and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present employees of Baxter Mexico made in

10

accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.

PORTUGAL

Language Consent. The Participant hereby expressly declares that he or she has full knowledge of the English language and has read, understood and freely accepted and agreed with the terms and conditions established in the Plan and the Agreement.

Conhecimento da Língua. Pela presente, o Participante declara expressamente que tem pleno conhecimento da língua inglesa e que leu, compreendeu e livremente aceitou e concordou com os termos e condições estabelecidas no Plano e no Acordo (Agreement em inglés).

RUSSIA

Securities Law Information

This Agreement, the Plan and all other materials the Participant may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. Absent any requirement under local law, the issuance of Shares under the Plan has not and will not be registered in Russia and hence the shares described in any Plan-related documents may not be offered or placed in public circulation in Russia.

U.S. Transaction

The Participant understands that the RSUs and any Shares under the Plan are to be issued and sold solely in the United States. Any Shares issued to the Participant upon vesting of the RSUs shall be delivered to the Participant’s brokerage account in the United States, where such Shares must be held until the time of sale. In no event will Shares be delivered to the Participant in Russia.

Anti-Corruption Information

Anti-corruption laws prohibit certain public servants, their spouses and their dependent children from owning any foreign source financial instruments (e.g., shares of foreign companies such as the Corporation). Accordingly, the Participant should inform the Company if he or she is covered by these laws because the Participant should not hold Shares acquired under the Plan.

Labor Law Information

If the Participant continues to hold Shares acquired at vesting of the RSUs after an involuntary Termination, he or she may not be eligible to receive unemployment benefits in Russia.

SINGAPORE

Securities Law Notification.

The RSUs are being granted pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Hence, statutory liability under the SFA in relation to the content of prospectuses will not apply. The Participant should note that the RSUs are subject to section 257 of the SFA and hence the RSUs may not be offered or sold, or made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore, unless such offer, sale or invitation is made (i) more than six (6) months from the Date of Grant, (ii) pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA, or (iii) pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.

In addition, the Participant understands that he or she is permitted to sell Shares acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of Shares acquired

11

under the Plan takes place outside of Singapore through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange (the “NYSE”).

Director Notification Requirement.

If the Participant is a director, alternate director, substitute director or shadow director1 of a Singapore Subsidiary, the Participant must notify the Singapore Subsidiary in writing within two (2) business days of (i) becoming the registered holder of or acquiring an interest (e.g., RSUs, Shares, etc.) in the Company or any Subsidiary, or becoming an alternate director, substitute director or shadow director (as the case may be), whichever occurs last, or (ii) any change in a previously disclosed interest (e.g., sale of Shares). If the Participant is the chief executive officer (“CEO”) of a Singapore Subsidiary and the above notification requirements are determined to apply to the CEO of a Singapore Subsidiary, the above notification requirements also may apply to the Participant.

SPAIN

Termination and Nature of Grant.

This provision supplements Section 2.3 (“Impact of Termination on RSUs”) of the Agreement and Article III (“Nature of Grant”) of the Agreement:

In accepting the grant of RSUs, the Participant consents to participation in the Plan and acknowledges that the Participant has received a copy of the Plan.

The Participant understands and agrees that, unless otherwise provided in the Agreement, the Participant will forfeit any RSUs that have not vested as of the date the Participant’s Termination ends without entitlement to the underlying Shares or to any amount of indemnification in the event of the Participant’s Termination for any reason including, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause (i.e., subject to a “despido improcedente”), individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment or service under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, and/or Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985.

The Participant understands that the Company has unilaterally, gratuitously and in its own discretion decided to grant RSUs under the Plan to certain individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not bind the Company or a Subsidiary, other than as set forth in the Agreement. Consequently, the Participant understands that the RSUs are granted on the assumption and condition that the RSUs and any Shares acquired upon vesting of the RSUs are not a part of any employment contract (either with the Company or a Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation), or any other right whatsoever. Further, the Participant understands that the RSUs would not be granted to the Participant but for the assumptions and conditions referred to above; thus, the Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken, or should any of the conditions not be met for any reason, any grant of or right to the RSUs shall be null and void.

Securities Law Notification.

No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory in connection with the grant of RSUs under the Plan. Neither the Plan, the Agreement (which includes this Non-U.S. Addendum), nor the Grant Notice have been nor will they be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and they do not constitute a public offering prospectus.

1 A shadow director is an individual who is not on the board of directors of the Singapore Subsidiary but who has sufficient control so that the board of directors of the Singapore Subsidiary acts in accordance with the directions or instructions of the individual.

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SWEDEN

Tax Withholding.

The following provision supplements Section 2.7 (“Tax Withholding”) of the Agreement:

Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax-Related Items as set forth in Section 2.7 of the Award Agreement, in accepting the grant of RSUs, the Participant authorizes the Company and/or the Employer to withhold Shares or to sell Shares otherwise deliverable to the Participant upon vesting/settlement to satisfy Tax-Related Items, regardless of whether the Company and/or the Employer have an obligation to withhold such Tax-Related Items.

SWITZERLAND

Securities Law Notification.

Neither this document nor any other materials relating to the RSUs constitute a prospectus according to article 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), and neither this document nor any other materials relating to the RSUs may be publicly distributed nor otherwise made publicly available in Switzerland to any person other than an employee of a member of the Company Group. Neither this document nor any other offering or marketing material relating to the RSUs have been or will be filed with, or approved or supervised by, any Swiss reviewing body according to article 51 FinSA or any Swiss regulatory authority (in particular, the Swiss Financial Market Supervisory Authority (FINMA)).

TAIWAN

Securities Law Notification.

The offer of participation in the Plan is available only for employees of the Company and its Subsidiaries. The offer of participation in the Plan is not a public offer of securities by a Taiwanese company.

TURKEY

Securities Law Notification.

The sale of Shares acquired under the Plan is not permitted within Turkey. The sale of Shares acquired under the Plan must occur outside Turkey and through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange (“NYSE”).

UNITED ARAB EMIRATES

Nature of Grant.

This provision supplements Article III (“Nature of Grant”) of the Agreement:

The Participant acknowledges that the RSUs and related benefits do not constitute a component of the Participant’s “wages” for any legal purpose. Therefore, the RSUs and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as social insurance contributions and/or any other labor-related amounts which may be payable.

Securities Law Notification.

The Agreement, the Grant Notice, the Plan and other incidental communication materials concerning the RSUs are intended for distribution only to employees of the Company or its Subsidiaries. The Dubai Creative Clusters Authority (formerly known as the Dubai Technology and Media Free Zone Authority), Emirates Securities and Commodities Authority and/or the Central Bank of the United Arab Emirates has no responsibility for reviewing or verifying any documents in connection with the RSUs. Neither the

13

Ministry of Economy nor the Dubai Department of Economic Development have approved these communications nor taken steps to verify the information set out in them, and have no responsibility for them.

Further, the Shares underlying the RSUs may be illiquid and/or subject to restrictions on their resale. The Participant should conduct his or her own due diligence on the RSUs and the Shares. If the Participant is in any doubt about any of the contents of the grant or other incidental documents, the Participant should obtain independent professional advice.

UNITED KINGDOM

Withholding. This provision supplements Section 2.7 of the Agreement:

Without limitation to Section 2.7 of the Agreement, the Participant agrees that he or she is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company or, if different, the Employer or by Her Majesty’s Revenue & Customs (“HMRC”) (or any other tax authority or any other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and, if different, the Employer against any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Participant’s behalf.

Notwithstanding the foregoing, if the Participant is a director or executive officer (within the meaning of Section 13(k) of the Exchange Act), the Participant understands that he or she may not be able to indemnify the Company for the amount of any income tax not collected from or paid by the Participant within ninety (90) days of the end of the U.K. tax year in which the event giving rise to the Tax-Related Items occurs, as it may be considered to be a loan and, therefore, it may constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) may be payable. The Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company and/or the Employer (as appropriate) the amount of any NICs due on this additional benefit, which may also be recovered from the Participant by any of the means referred to in Section 2.7 of the Agreement.

*    *    *    *

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EXHIBIT B

Baxter International Inc.

Incentive Compensation Recoupment Policy

1.0    Introduction

This policy applies to all cash bonuses paid by Baxter International Inc. (the “Company”) and its subsidiaries under its 2007 Incentive Plan, or any successor Plan, and all grants of equity awarded by the Company to any person who is not designated as an officer by the Board of Directors of the Company. Cash bonuses and grants of equity made to such officers are covered by the Executive Compensation Recoupment Policy. Collectively such cash bonuses and equity awards will be referred to as “Incentive Compensation”. Equity awards are any compensatory awards under the company’s equity compensation plans in the form of common stock or any derivative of common stock, including stock options, stock awards, restricted stock, restricted stock units, and performance share units.

2.1Triggers; Scope of Actions

2.2Following a restatement of the Company’s financial results requiring an amendment to any previously filed results, the Chairman and CEO (the “CEO”) will review the facts and circumstances that led to the requirement for the restatement and take any actions it deems appropriate with respect to Incentive Compensation. The CEO will consider whether an employee received compensation based on performance reported but not actually achieved or was accountable for the events that led to the restatement, including any misconduct.

2.3If an employee violates any of the restrictive covenants contained in any agreement between the employee and the Company, the Chairman and CEO will review the facts and circumstances related to the violation and take any actions it deems appropriate with respect to Incentive Compensation.

2.4Actions that may be taken include: recovery, reduction, or forfeiture of all or part of any Incentive Compensation previously provided or to be provided in the future; disciplinary actions; and the pursuit of any other remedies.

3.0    Documentation

This Policy will apply to Equity Plans covering any employee beginning with the Company’s 2011 Equity Plans. In addition, this Policy will be incorporated into the Company’s Management Incentive Compensation Program (MICP) beginning with the Company’s 2011 MICP, as well as any resolutions adopted by the Board or Compensation Committee as a condition to approval of the payout of any cash bonus under the 2007 Incentive Plan, or any successor Plan, beginning with the cash bonuses paid by the Company in March 2012.

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EXHIBIT B

Baxter International Inc.

Executive Compensation Recoupment Policy

(As amended and restated on March 8, 2018)

1.0    Introduction

This policy (as amended and restated, this “Policy”) applies to all cash bonuses paid by Baxter International Inc. (the “Company”) under its 2007 Incentive Plan, or any successor Plan, and all grants of equity awarded by the Company to any person designated as an officer by the Board of Directors of the Company (the “Board”). Collectively such bonuses and equity awards will be referred to as “Executive Incentive Compensation”. Equity awards are any compensatory awards under the company’s equity compensation plans in the form of common stock or any derivative of common stock, including stock options, stock awards, restricted stock, restricted stock units, and performance share units. For the avoidance of doubt, this Policy shall apply to any person who is a designated officer either at the time of grant or the time of payment of the Executive Incentive Compensation.

2.1Triggers; Scope of Actions

2.2Following a restatement of the Company’s financial results requiring an amendment to any previously filed results, the Board will review the facts and circumstances that led to the requirement for the restatement and take any actions it deems appropriate with respect to Executive Incentive Compensation. The Board will consider whether an officer received compensation based on performance reported but not actually achieved or was accountable for the events that led to the restatement, including any misconduct.

2.3If an officer violates any of the restrictive covenants contained in any agreement between the officer and the Company, the Board will review the facts and circumstances related to the violation and take any actions it deems appropriate with respect to Executive Incentive Compensation.

2.4Actions the Board may take include: recovery, reduction, or forfeiture of all or part of any Executive Incentive Compensation previously provided or to be provided in the future; disciplinary actions; and the pursuit of any other remedies.

3.0    Documentation

This Policy will be incorporated into future Equity Plans covering any officer beginning with the Company’s 2009 Equity Plan as well as resolutions adopted by the Board or Compensation Committee as a condition to approval of the payout of any cash bonus under the 2007 Incentive Plan, or any successor Plan, to any officer beginning with the cash bonuses paid by the Company in March 2009. The Executive Compensation team will provide a copy of this Policy to each officer.

4.0    Disclosure

In the event the Board recoups incentive compensation under this Policy, Company management intends to disclose the aggregate amount of incentive compensation recovered under this Policy, so long as the underlying event has already been publicly disclosed publicly by the Company. This disclosure would appear in the Company’s annual proxy statement following any such Board action and would provide the aggregate amount of recovery for each event if there is more than one applicable event.

*    *    *    *

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EX-10.3

Exhibit 10.3

BAXTER INTERNATIONAL INC.
2021 INCENTIVE PLAN

STOCK OPTION AWARD GRANT NOTICE

Baxter International Inc., a Delaware corporation (the “Company”), pursuant to the Baxter International Inc. 2021 Incentive Plan, as may be amended from time to time (the “Plan”), hereby grants to the holder listed below (the “Participant”) the number of stock options set forth below (the “Options”). The Options are subject to the terms and conditions set forth in this Stock Option Award Grant Notice (the “Grant Notice”), the Stock Option Award Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in the Grant Notice and the Agreement.

Participant:	[•]
Participant ID:	[•]
Date of Grant:	[•]
Number of Options:	[•]
Exercise Price	[•]
Vesting Schedule:	[•]
Expiration Date:	[•]
Applicable Recoupment Policy:	The Incentive Compensation Recoupment Policy shall apply to Participants who are not designated officers of the Company and the Executive Compensation Recoupment Policy shall apply to all Participants who are designated officers of the Company either at the time of grant or vesting. Both polices are attached hereto as Exhibit B.

By accepting this Award electronically through the stock plan administrator’s online grant acceptance procedure, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement, and the Grant Notice. If the Participant does not accept this Award through the online acceptance process, the Participant’s Award will be canceled, and the Participant will not be entitled to any benefits from the Award or to any compensation or benefits in lieu of the canceled Award. The Participant has reviewed the Agreement, the Plan, and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement, and the Plan. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, the Grant Notice, or the Agreement.

If the Participant declines the Award, the Award will be canceled, and the Participant will not be entitled to any benefits from the Award or to any compensation or benefits in lieu of the canceled Award.

EXHIBIT A

STOCK OPTION AWARD AGREEMENT

Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to the Participant the number of Options set forth in the Grant Notice.

ARTICLE I.
GENERAL

Section 1.1Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice. For purposes of this Agreement:

(a)“Employer” means the member of the Company Group that employs the Participant.

(b)“Qualifying Retirement” shall mean a Termination of a Participant who is at least 65 years of age, or at least 55 years of age with at least 10 years of active continuous service with a member of the Company Group.

(c)“Trading Day” means a date Shares are traded on the New York Stock Exchange or, if the Shares are not traded on the New York Stock Exchange, a date the Shares are traded or reported by an applicable automated quotation system or such other exchange or automated quotation system, if applicable.

(d)“Vesting Date” means the applicable date(s) when the restrictions on the Options lapse, as provided in the Grant Notice or herein.

Section 1.2Incorporation of Terms of Plan. The Options and the shares of Common Stock issued to the Participant hereunder (“Shares”) are subject to the terms and conditions set forth in this Agreement, the Grant Notice, and the Plan, which are incorporated herein by reference.

ARTICLE II.
AWARD OF STOCK OPTIONS

Section 2.1Award of Options. In consideration of the Participant’s continued employment with or service to a member of the Company Group and for other good and valuable consideration, effective as of the Date of Grant, the Company has granted to the Participant the number of Options set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan, and this Agreement, subject to adjustment as provided in Section 12 of the Plan. Except as otherwise provided herein, each Option represents the right to receive one Share at the times and subject to the conditions set forth herein. However, unless and until the Options have vested, the Participant will have no right to the payment of any Shares subject thereto. Prior to the actual delivery of any Shares, the Options will represent an unsecured obligation of the Company. All Options granted hereunder are Nonqualified Stock Options.

Section 2.2Term of Options. Unless terminated earlier as provided below or otherwise pursuant to the Plan, the Options shall expire on the date set forth in the Grant Notice. If Options would expire on a date that is not a Trading Day (for any reason, including, without limitation, a Participant’s Termination for any reason or at the normal expiration date), they will expire at the close of trading on the last Trading Day preceding that date. If the Options would expire at a time when trading in the Shares is prohibited by the Company’s insider trading policy (or Company-imposed “blackout period”), then the expiration date shall be automatically extended under the earlier of (i) the thirtieth (30th) day following the expiration of such prohibition and (ii) the normal expiration date of the Options, as set forth in the Grant Notice. Under no circumstances may Options be exercised after they have expired.

Section 2.3Vesting of Options. Subject to the Participant’s continued employment with or service to a member of the Company Group on each applicable Vesting Date and subject to the terms of this Agreement, the Options shall vest in such amounts and at such times as are set forth in the Grant Notice or Section 2.4 of this Agreement and become exercisable.

Section 2.4Impact of Termination on Options. In the event the Participant incurs a Termination prior to a Vesting Date set forth in the Grant Notice, then any unvested Options shall be canceled and forfeited, except as may be otherwise provided herein, in the Grant Notice, by the Committee or as set forth in a written agreement between the Participant and the Company or Employer. For the avoidance of doubt, a transfer of employment within the Company Group will not constitute a Termination.

(a)Qualifying Retirement. In the event the Participant incurs a Termination as a result of a Qualifying Retirement for any reason other than for Cause, or by reason of the Participant’s death or Disability, then (i) if the date of such Termination is after the calendar year of the Date of Grant, the Options shall continue to become exercisable on the Vesting Date(s) specified in the Grant Notice, or (ii) if the date of such Termination is in the calendar year of the Date of Grant, a pro-rata portion of the unvested Options shall continue to become exercisable on the Vesting Date(s) specified in the Grant Notice. For purposes of the foregoing, the pro-rata portion of the unvested Options that shall continue to become exercisable shall be determined by multiplying (x) the Number of Options specified in the Grant Notice by (y) the percentage equal to the number of months worked in the applicable calendar year of the Date of Grant, rounded to the nearest whole month, divided by twelve (12). Subject to Section 2.2, such Options shall expire on the first to occur of the fifth anniversary of the Termination as a result of a Qualifying Retirement or the normal expiration date of the Options, as set forth in the Grant Notice.

(b)Death or Disability. In the event the Participant incurs a Termination as a result of the Participant’s death or Disability, any unvested Options shall vest as follows: (i) if the date of such Termination is after the calendar year of the Date of Grant, all unvested Options shall immediately vest and become exercisable, or (ii) if the date of such Termination is in the calendar year of the Date of Grant, a pro-rata portion of the unvested Options shall immediately vest and become exercisable. For purposes of the foregoing, the pro-rata portion of the unvested Options that shall immediately vest and become exercisable shall be determined by multiplying (x) the Number of Options specified in the Grant Notice by (y) the percentage equal to the number of months worked in the applicable calendar year of the Date of Grant, rounded to the nearest whole month, divided by twelve (12). Subject to Section 2.2, such Options shall expire on the first to occur of the fifth anniversary of the Termination as a result of Participant's death or Disability or the normal expiration date of the Options, as set forth in the Grant Notice.

(c)Termination for Cause. In the event the Participant incurs a Termination for Cause, except as may be otherwise provided by the Committee or as set forth in a written agreement between the Participant and the Company or Employer, the Participant shall immediately forfeit any and all Options granted under this Agreement (whether or not vested), the Participant’s rights in any such Options shall lapse and expire, and the Participant shall also be subject to the Executive Compensation Recoupment Policy or Incentive Compensation Recoupment Policy, as applicable.

(d)All Other Terminations. In the event the Participant incurs a Termination other than as set forth in Section 2.4(a),Section 2.4(b) or Section 2.4(c), except as may be otherwise provided herein or by the Committee or as set forth in a written agreement between the Participant and the Company or Employer, any unvested Options shall expire immediately and any vested Options that are exercisable will expire as of the first to occur of, subject to Section 2.2, (i) ninety (90) days after the Participant incurs a Termination (or the prior trading day if the 90th day after Termination is a non-trading day) or (ii) the normal expiration date of the Option, as set forth in the Grant Notice. If the Participant dies or becomes disabled during the ninety (90) day period, subject to Section 2.2, the Options will expire on the first to occur of the fifth anniversary of the Termination (or the prior trading day if the fifth anniversary of the Termination is a non-trading day) or the normal expiration date of the Option, as set forth in the Grant Notice.

(e)Outside the United States. For purposes of this Agreement, if the Participant is employed or providing services outside the United States, the Committee (or its delegate) may determine

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that the date the Participant incurs a Termination shall mean the date the Participant is no longer actively providing services to a member of the Company Group (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction in which the Participant is employed or providing services or the terms of the Participant’s employment agreement, if any) and that the Participant’s right to vest in the Options under the Plan, if any, will terminate as of such date, the post-Termination exercise period (if any) with respect to vested Options will begin as of such date, and will not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction in which the Participant is employed or providing service or the terms of the Participant’s employment or service agreement, if any); the Committee (or its delegate) shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Options (including whether the Participant may still be considered to be providing services while on a leave of absence).

Section 2.5Impact of a Change in Control on Options. In the event of a Change in Control, the treatment of the Options shall be governed by Section 12(b) of the Plan.

Section 2.6Exercise of Options.

(a) Options that have become exercisable may be exercised in whole or in part (but with respect to whole Shares only) by delivery of written or electronic notice of exercise to the Company (or any other notice of exercise method provided by the Company, in its sole discretion), in such form and pursuant to such procedures as may be designated by the Company from time to time, indicating the number of Shares with respect to which the Options are being exercised, which notice shall be accompanied by payment in full for the Shares. If Options would become exercisable on a date that is not a Trading Day, they will become exercisable on the next Trading Day. The Exercise Price may be paid in accordance with Section 7(d) of the Plan, or by such other method as the Committee may permit, in its sole discretion.

Notwithstanding the foregoing, the Committee may suspend or eliminate any of the specified methods of exercise, require payment in a particular or different method of exercise than those specified, may allow the Participant to exercise the Options only by means of a cashless exercise (either a cashless “sell all” exercise or a cashless “sell-to-cover” exercise) as it shall determine in its sole discretion, or may require the Participant to sell any Shares acquired under the Plan immediately or within a specified period following the Participant’s Termination (in which case, this Agreement shall give the Company the authority to issue sales instructions on the Participant’s behalf).

(b)Except as the Committee otherwise may provide and in accordance with Section 14(b) of the Plan, Options may be exercised only by the Participant, the Participant’s legal representative, or a person to whom the Participant’s rights in the Options are transferred by will or the laws of descent and distribution.

(c)Following the exercise of Options hereunder, as promptly as practical after receipt of such notification and full payment of the Exercise Price and any required Tax-Related Items (as defined and provided in Section 2.8 hereof), the Company shall issue or transfer, or cause such issue or transfer, to the Participant the number of Shares with respect to which the Options have been so exercised. All distributions shall be made by the Company in the form of whole Shares.

Section 2.7Conditions to Exercise and Issuance of Certificates. The Company shall not be required to permit the Participant to exercise the Options in a manner that Committee determines would violate the Sarbanes-Oxley Act of 2002, as it may be amended from time to time, or issue or deliver any certificate or certificates for any Shares or to cause any Shares to be held in book-entry form prior to the fulfillment of all of the following conditions: (a) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of the Shares under any U.S. state or federal law or under rulings or regulations of the U.S. Securities and Exchange Commission or other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable, (c) the obtaining of any approval or other clearance from any U.S. state or federal governmental agency or non-U.S. regulatory agency that the

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Committee shall, in its absolute discretion, determine to be necessary or advisable, and (d) the receipt of full payment of any applicable Tax-Related Items in accordance with Section 2.8 by the member of the Company Group with respect to which the applicable withholding obligation arises.

Section 2.8Tax Withholding. Notwithstanding any other provision of this Agreement:

(a)The provisions of Section 14(e) of the Plan are incorporated herein by reference and made a part hereof. The Participant acknowledges that he or she may be required to pay to the Company or, if different, the Employer, and that the Company, the Employer, or any Subsidiary shall have the right and are hereby authorized to withhold from any compensation or other amount owing to the Participant, applicable income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (including taxes that are imposed on the Company or the Employer as a result of the Participant’s participation in the Plan but are deemed by the Company or the Employer to be an appropriate charge to the Participant) (collectively, “Tax-Related Items”), with respect to any issuance, transfer, or other taxable event under this Agreement or under the Plan and to take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such Tax-Related Items. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Options, including, but not limited to the grant, exercise and/or settlement of the Options and the subsequent sale of Shares acquired upon exercise of the Options; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Options to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve a particular tax result. Further, if the Participant is subject to Tax-Related Items in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)The Committee may permit the Participant to elect to satisfy such obligations by (i) cash, wire transfer of immediately available funds or check; (ii) delivering Shares (which are not subject to any pledge or other security interest) that have been held by the Participant for not less than six (6) months (or such other period as established from time to time by the Committee in order to avoid adverse accounting treatment applying GAAP) having a Fair Market Value equal to such withholding liability; (iii) delivery of a written or electronic notice that the Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable upon exercise of the Options, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate applicable tax withholding obligations; provided that payment of such proceeds is then made to the Company upon settlement of such sale in satisfaction of the applicable tax withholding obligations; or (iv) the Company withholding, or causing to be withheld, Shares otherwise issuable under the Options; provided that the number of Shares that may be so withheld or surrendered shall be limited to the number of Shares that have a Fair Market Value on the date of withholding no greater than the aggregate amount of such obligations based on the maximum individual statutory withholding rates or other rates that will not have a negative accounting impact, in the Participant’s applicable jurisdictions for U.S. federal, state, local and non-U.S. income tax and payroll tax purposes that are applicable to such taxable income. Notwithstanding the foregoing, the Participant authorizes the Company to satisfy the applicable tax withholding obligations from proceeds of the sale of Shares issuable under the Options through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization) and/or through withholding from any cash, other securities, or other property issuable or deliverable under any Award or from any compensation or other amounts owing to the Participant. If the obligation for Tax-Related Items is satisfied by withholding in Shares, the Participant is deemed to have been issued the full number of Shares subject to the exercised Options, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items. The Participant acknowledges that, regardless of any action taken by the Company, the Employer, or any Subsidiary the ultimate liability for all Tax-Related Items, is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.

(c)Notwithstanding any other provision of this Agreement, the Company shall not be obligated to deliver any certificate representing Shares issuable with respect to the Options to, or to cause any such Shares to be held in book-entry form by, the Participant or the Participant’s legal

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representative unless and until the Participant or the Participant’s legal representative shall have paid the Tax-Related Items resulting from the grant, exercise or settlement of the Options or any other taxable event related to the Options.

Section 2.9Rights as Stockholder. Neither the Participant nor any Person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars and delivered to the Participant (including through electronic delivery to a brokerage account). Except as otherwise provided herein, after such issuance, recordation and delivery, the Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares.

ARTICLE III.

NATURE OF GRANT

Section 3.1In accepting the grant of the Options, the Participant acknowledges, understands, and agrees that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended, or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of the Options is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of an award, or benefits in lieu of an award, even if Options have been granted in the past;

(c)all decisions with respect to future grants of Options or other grants, if any, will be at the sole discretion of the Company;

(d)the Participant is voluntarily participating in the Plan;

(e)the Options and the Shares subject to the Options, and the income from and value of same, are not intended to replace any pension rights or compensation;

(f)the Options and the Shares subject to the Options, and the income from and value of same, are not part of normal or expected compensation for purposes of, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday pay, long-service awards, pension or retirement or welfare benefits or similar payments;

(g)unless otherwise agreed with the Company in writing, the Options and the Shares subject to the Options, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary;

(h)the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;

(i)no claim or entitlement to compensation or damages shall arise from forfeiture of the Options resulting from the Participant’s Termination (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or the terms of the Participant’s employment agreement, if any); and

(j)neither the Company nor the Employer shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Options or of any amounts due to the Participant pursuant to the settlement of the Options upon exercise or the subsequent sale of any Shares acquired upon settlement.

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ARTICLE IV.

DATA PRIVACY

The Company is processing personal data of the Participant for purposes related to Plan administration services, based on the appropriate legal basis, depending on the Participant’s country, as stipulated in the HR Privacy Notice shared with the Participant and as in force. The Company further shares such data with its affiliates or processors, as appropriate, and only on a “need to know basis”. That may also include human resources personnel, certain executives, managers, and employees at other worldwide affiliates of the Company Group, who may have access to certain of the Participant’s personal data. Some of those recipients may be located or may have relevant operations outside of the Participant’s country, such as in the United States, where the data protection laws may not provide a level of protection equivalent to the laws of the Participant’s country. The Company implements the appropriate legal, technical, and organizational measures and mechanisms in this regard.

For further information about the HR Privacy Notice and the processing of the Participant’s data in relation to the Plan, the Participant may contact local HR or send an email to: privacy@baxter.com.

ARTICLE V.

OTHER PROVISIONS

Section 5.1Administration. The Committee (and its delegates) shall have the power to interpret the Plan, the Grant Notice, and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice, and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee will be final and binding upon the Participant, the Company, and all other interested Persons. To the extent allowable pursuant to applicable law, no member of the Committee or the Board will be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice, or this Agreement.

Section 5.2Options Not Transferable. The Options may not be sold, pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the Options have been issued, and all restrictions applicable to such Shares have lapsed. No Options or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. Notwithstanding the foregoing, with the consent of the Committee, the Options may be transferred as described in Section 14(b)(ii) of the Plan, pursuant to any such conditions and procedures the Committee may require.

Section 5.3Adjustments. The Participant acknowledges that the Options and the Shares subject to the Options are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 12 of the Plan.

Section 5.4Cooperation; Repatriation and Compliance Obligations. The Participant agrees to cooperate with the Company and the Employer in taking any action reasonably necessary or advisable to consummate the transactions contemplated by this Agreement. Further, the Participant agrees to repatriate all payments attributable to the Options in accordance with local foreign exchange rules and regulations in the Participant’s country of residence (and country of employment, if different). In addition, the Participant agrees to take any and all actions, and consents to any and all actions taken by the Employer, the Company and its Subsidiaries as may be required to allow the Employer, the Company and its Subsidiaries to comply with applicable law in the Participant’s country of residence (and country of employment, if different). Finally, the Participant agrees to take any and all actions that may be required

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to comply with the Participant’s personal legal and tax obligations under local laws, rules, and regulations in the Participant’s country of residence (and country of employment, if different).

Section 5.5Non-U.S. Addendum. Notwithstanding any provisions in this Agreement to the contrary, the Options shall be subject to any special terms and conditions set forth in the Non-U.S. Addendum to this Agreement for the Participant’s country of residence (and country of employment or service, if different). Moreover, if the Participant relocates to another country, any special terms and conditions for such country will apply to the Participant, to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable for legal or administrative reasons (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer). The Non-U.S. Addendum constitutes part of this Agreement.

Section 5.6Notices. For the purpose of the Plan and this Agreement, notices and all other communications shall be in writing and shall be deemed to have been duly given when delivered or mailed by overnight courier or United States registered mail, return receipt requested, postage prepaid (or similar foreign postal service), addressed to the Plan to the General Counsel, Baxter International Inc., One Baxter Parkway, Deerfield, Illinois 60015, USA and to the Participant to the address set forth in the Company’s payroll records or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

Section 5.7Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Options and on any Shares acquired under the Plan, to the extent the Company determines, in its sole discretion, it is necessary or advisable in order to comply with local law, rules and regulations or to facilitate the operation and administration of the Options and the Plan. Such requirements may include (but are not limited to) requiring the Participant to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

Section 5.8Language. The Participant acknowledges that he or she is proficient in the English language, or has consulted with an advisor who is proficient in the English language, so as to enable the Participant to understand the provisions of this Agreement and the Plan. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

Section 5.9Electronic Delivery and Acceptance. The Company, in its sole discretion, may decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company.

Section 5.10Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

Section 5.11Governing Law; Venue. Except to the extent preempted by US federal law, the laws of the State of Illinois, USA shall govern the interpretation, validity, administration, enforcement, and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws. For any legal action relating to this Agreement, the parties to this Agreement consent to the exclusive jurisdiction and venue of the federal courts in Chicago, Illinois.

Section 5.12Non-Competition, Non-Solicitation, and Confidentiality Agreement. Notwithstanding any other provision in this Agreement or the Plan to the contrary, if determined to be applicable to the Participant in the Company’s sole discretion, any grant hereunder shall be cancelled and no Awards will vest, be settled, or be exercisable if the Participant does not accept, sign, date and return, as directed by the Company, a Non-Competition, Non-Solicitation and Confidentiality Agreement, in

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such form as determined by the Company, within sixty (60) days of being provided a copy of such agreement.

Section 5.13Repayment of Proceeds; Clawback and Offset Policy. The Shares underlying the Options and all proceeds related to such Shares are subject to the Company’s Incentive Compensation Recoupment Policy or Executive Compensation Recoupment Policy, as specified in the Grant Notice, which are attached to the Grant Notice as Exhibit B.

Additionally, where applicable, if (i) the Participant’s employment with the Company Group terminates for any reason and (ii) such Participant violates (either during and/or after employment with the Company Group) the terms of the Participant’s Non-Competition, Non-Solicitation and Confidentiality Agreement as described in and required by Section 5.12, then any Awards that have not vested or are not exercisable as of the Termination date (including any Awards that would later vest as a result of a Qualifying Retirement) shall be cancelled and shall not vest, be settled, or be exercisable. Furthermore, any Awards which have vested or became exercisable within the 12 months preceding the Termination date shall be forfeited and shall be returned to the Company, and any Awards that vested after the Termination date as a result of a Qualifying Retirement shall be forfeited. If the Participant has sold or exercised any such Awards, then the Participant shall make a cash payment to the Company in an amount equal to the amount of the net gain recognized from the sale or exercise of such Awards within 30 business days of written notice by the Company to the Participant.

Section 5.14Conformity to Securities Laws. The Participant acknowledges that the Plan, the Grant Notice, and this Agreement, are intended to conform to the extent necessary with all applicable laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, and other applicable securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Options are granted, only in such a manner as to conform to applicable laws. To the extent permitted by applicable laws, the Plan, the Grant Notice, and this Agreement, shall be deemed amended to the extent necessary to conform to applicable laws.

Section 5.15Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended, or terminated at any time or from time to time by the Committee or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Options in any material way without the prior written consent of the Participant.

Section 5.16Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in Section 5.2 of this Agreement and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

Section 5.17Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, the Options, the Grant Notice, and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable laws, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

Section 5.18Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as an employee of any member of the Company Group or shall interfere with or restrict in any way the rights of any member of the Company Group, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without cause, except to the extent (i) expressly provided otherwise in a written agreement between a Member of the Company Group and the Participant or (ii) where such provisions are not consistent with applicable foreign or local laws, in which case such applicable foreign or local laws shall control.

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Section 5.19Entire Agreement. The Plan, the Grant Notice, and this Agreement (including the Addenda attached hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof. Except as specifically provided in the Grant Notice or this Agreement, in the event of any inconsistency between the Plan, the Grant Notice or this Agreement, the Plan will control.

Section 5.20Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

Section 5.21Limitation on the Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Options.

Section 5.22Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to applicable law, each of which shall be deemed an original and all of which together shall constitute one instrument.

Section 5.23Private Offering. If the Participant is a resident outside the United States, the grant of the Options is not intended to be a public offering of securities in the Participant’s country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus, or other filing with the local securities authorities with respect to the grant of the Options unless otherwise required under local law. No employee of the Company is permitted to advise the Participant on whether the Participant should acquire Shares under the Plan or provide the Participant with any legal, tax or financial advice with respect to the grant of the Options. Investment in Shares involves a degree of risk. Before deciding to acquire Shares pursuant to the Options, the Participant should carefully consider all risk factors and tax considerations relevant to the acquisition of Shares under the Plan or the disposition of them. Further, the Participant should carefully review all of the materials related to the Options and the Plan, and the Participant should consult with the Participant’s personal legal, tax and financial advisors for professional advice in relation to the Participant’s personal circumstances.

Section 5.24Exchange Control, Foreign Asset/Account and/or Tax Reporting. The Participant acknowledges that there may be certain exchange control, foreign asset/account and/or tax reporting requirements that may affect the Participant’s ability to acquire or hold Shares or cash received from participating in the Plan (including the receipt of any dividends paid on Shares and the proceeds from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or related transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of participating in the Plan to the Participant’s country within a certain time after receipt. The Participant acknowledges that it is the Participant’s responsibility to comply with such regulations and that the Participant should speak to his or her personal advisor on this matter.

Section 5.25Insider Trading/Market Abuse. The Participant may be subject to insider trading restrictions and/or market abuse laws based on the exchange on which the Shares are listed and in applicable jurisdictions, including the United States, the Participant’s country and the designated broker’s country (including any Company Group securities trading policy), which may affect the Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., the Options) or rights linked to the value of Shares under the Plan during such times that the Participant is considered to have “inside information” regarding the Company (as defined by the laws or regulations in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant acknowledges that it is the Participant’s responsibility to comply with any applicable restrictions and that the Participant should speak to his or her personal advisor on this matter.

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Section 5.26Waiver. The waiver by the Company with respect to the Participant’s (or any other participant’s) compliance of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement.

Section 5.27Consent and Agreement With Respect to Plan. The Participant (a) acknowledges that a copy of the Plan and the U.S. prospectus for the Plan has been available to the Participant; (b) represents that he or she has read and is familiar with the terms and provisions thereof, has had an opportunity to obtain the advice of counsel of his or her choice prior to executing this Agreement and fully understands all provisions of this Agreement and the Plan; (c) accepts the Options subject to all of the terms and provisions thereof; and (d) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or this Agreement.

To the extent that the Company has established, either itself or through a third-party plan administrator, the ability to accept this award electronically, such acceptance shall constitute the Participant’s signature hereof.

Company:                            Participant:

_____________________ _____________________

By: Sven Skillrud

Title: Vice President, Total Rewards

* * * * *

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ADDENDUMTO

THE STOCK OPTION AWARD AGREEMENT

FOR NON-U.S. PARTICIPANTS

In addition to the terms of the Plan, the Grant Notice and the Agreement, the Options are subject to the following additional terms, conditions, and provisions (this “Non-U.S. Addendum”). All capitalized terms as contained in this Non-U.S. Addendum shall have the same meaning as set forth in the Plan, the Grant Notice and/or the Agreement. Pursuant to Section 5.5 of the Agreement, if the Participant transfers residence and/or employment or service to another country reflected in this Non-U.S. Addendum, the special terms, conditions and provision for such country will apply to the Participant to the extent the Company determines, in its sole discretion, that the application of such terms, conditions and provisions is necessary for legal or administrative reasons (or the Company may establish alternative terms and conditions as may be necessary or advisable to accommodate the Participant’s transfer).

AUSTRALIA

Tax Information. The Plan is a plan to which Subdivision 83A-C of the Income Tax Assessment Act 1997 (Cth) (the “Act”) applies (subject to the conditions in that Act).

Australia Offer Document. This grant of Options is intended to comply with the provisions of the Corporations Act 2001, Australia Securities and Investments Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order CO 14/1000. Additional details are set forth in the Australia Offer Document, a copy of which is attached to the end of this section for Australia as Annex 1.

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ANNEX 1

OFFER DOCUMENT

Baxter International Inc.
2021 Incentive Plan

OFFER OF STOCK OPTIONS

TO AUSTRALIAN RESIDENT EMPLOYEES

The Company is pleased to provide the Participant with this offer to participate in the Plan. This offer sets out information regarding the grant of Options to Australian resident employees of the Company and its parents, Subsidiaries and Subsidiaries (“Australian Participants”). This information is provided by the Company to ensure compliance of the Plan with Australian Securities and Investments Commission (“ASIC”) Class Order 14/1000 and relevant provisions of the Corporations Act 2001.

In addition to the information set out in the Agreement and the Non-U.S. Addendum, Australian Participants are also being provided with copies of the following documents:

(a)the Plan;

(b)the Plan prospectus; and

(c)Employee Information Supplement for Australia (collectively, the “Additional Documents”).

The Additional Documents provide further information to help Australian Participants make an informed investment decision about participating in the Plan. Neither the Plan nor the Plan prospectus is a prospectus for the purposes of the Corporations Act 2001.

Australian Participants should not rely upon any oral statements made in relation to this offer. Australian Participants should rely only upon the statements contained in the Agreement, including the Non-U.S. Addendum, and the Additional Documents when considering participation in the Plan.

Securities Law Notification. Investment in Shares involves a degree of risk. Eligible employees who elect to participate in the Plan should monitor their participation and consider all risk factors relevant to the acquisition of Shares under the Plan as set forth below and in the Additional Documents.

The information herein is general information only. It is not advice or information that takes into account Australian Participants’ objectives, financial situation and needs.

Australian Participants should consider obtaining their own financial product advice from a person who is licensed by ASIC to give such advice.

Additional Risk Factors for Australian Residents. Australian Participants should have regard to risk factors relevant to investment in securities generally and, in particular, to holding Shares. For example, the price at which an individual Share is quoted on The New York Stock Exchange (“NYSE”) may increase or decrease due to a number of factors. There is no guarantee that the price of a Share will increase. Factors that may affect the price of an individual Share include fluctuations in the domestic and international market for listed stocks, general economic conditions, including interest rates, inflation rates, commodity and oil prices, changes to government fiscal, monetary or regulatory policies, legislation or regulation, the nature of the markets in which the Company operates and general operational and business risks.

More information about potential factors that could affect the Company’s business and financial results will be included in the Company’s most recent Annual Report on Form 10-K and the Company’s Quarterly Report on Form 10-Q. Copies of these reports are available at http://www.sec.gov/, on the

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Company’s investor’s page at https://investor.baxter.com/investors/investor-overview/default.aspx, and upon request to the Company.

In addition, Australian Participants should be aware that the Australian dollar (“AUD”) value of any Shares acquired under the Plan will be affected by the USD/AUD exchange rate. Participation in the Plan involves certain risks related to fluctuations in this rate of exchange.

Common Stock in a U.S. Corporation. Common stock of a U.S. corporation is analogous to ordinary shares of an Australian corporation. Each holder of a Share is entitled to one vote. Dividends may be paid on the Shares out of any funds of the Company legally available for dividends at the discretion of the Board. Further, Shares are not liable to any further calls for payment of capital or for other assessment by the Company and have no sinking fund provisions, pre-emptive rights, conversion rights or redemption provisions.

Ascertaining the Market Price of Shares. Australian Participants may ascertain the current market price of an individual Share as traded on NYSE under the symbol “BAX” at: https://www.nyse.com/quote/XNYS:BAX. The AUD equivalent of that price can be obtained at: https://www.rba.gov.au/statistics/frequency/exchange-rates.html.

Please note that this is not a prediction of what the market price of the Shares will be on any applicable Vesting Date or when Shares are issued to Australian Participants (or at any other time), or of the applicable exchange rate at such time.

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BELGIUM

Unless otherwise determined by the Company, the Participant may accept the Options only on or after the 61st day after the date the material terms of the Options are communicated to the Participant.

BRAZIL

Compliance with the Law. By accepting the Options, the Participant acknowledges his or her agreement to comply with applicable Brazilian laws and to pay any and all applicable Tax-Related Items.

Nature of Grant. This provision supplements Article III (“Nature of Grant”) of the Agreement:

By accepting the Options, the Participant agrees that (i) the Participant is making an investment decision and (ii) the value of the underlying Shares is not fixed and may increase or decrease over the vesting period without compensation to the Participant.

CANADA

Forfeiture upon Termination. This provision supplements Section 2.4(d) of the Agreement:

For purposes of the Options, notwithstanding Section 2.4(d) of the Agreement, the Committee or its delegate may provide that the Participant’s Termination will occur as of the date the Participant is no longer actually employed or otherwise rendering services to the Service Recipient (regardless of the reason for such Termination and whether or not later found to be invalid or in breach of employment or other laws or otherwise rendering services or the terms of the Participant’s employment or other service agreement, if any). In such case, unless otherwise provided in the Agreement or extended by the Company, the Participant’s right to vest in and exercise the Options under the Plan, if any, will terminate as of such date (the “Termination Date”). The Termination Date will not be extended by any common law notice period. Notwithstanding the foregoing, however, if applicable employment standards legislation specifically requires continued entitlement to vesting during a statutory notice period, the Participant’s right to vest in and exercise the Options under the Plan, if any will be allowed to continue for that minimum notice period but then immediately terminate effective as of the last day of the Participant’s minimum statutory notice period. In the event the date the Participant is no longer providing actual service cannot be reasonably determined under the terms of the Agreement and/or the Plan, the Committee or its delegate shall have the exclusive discretion to determine when the Participant is no longer actively providing services for purposes of the Options (including whether the Participant may still be considered to be providing services while on a leave of absence). Unless the applicable employment standards legislation specifically requires, in the case of the Participant, the Participant will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which his service relationship is terminated (as determined under this provision) nor will the Participant be entitled to any compensation for lost vesting.

Securities Law Notification. The Participant may not be permitted to sell within Canada Shares acquired under the Plan. The Participant may only be permitted to sell or dispose of any Shares acquired under the Plan if such sale or disposal takes place outside of Canada through the facilities of a stock exchange on which the Shares are listed (i.e., the New York Stock Exchange).

CHILE

Securities Law Notification.

The offer of Options refers to securities not registered in the Registry of Securities or in the Registry of Foreign securities of the Chilean Commission for the Financial Market, and therefore: (i) the Shares shall not be subject to public offering in Chile; and (ii) the Company is not subject to the oversight of the Chilean Commission for the Financial Market nor to the continual information obligations that Chilean law and regulations require from registered issuers.

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CHINA

The following provisions apply only to the Participants who are subject to exchange control restrictions imposed by the State Administration of Foreign Exchange (“SAFE”), as determined by the Company in its sole discretion:

Exercise of the Options

The Participant’s Employer must be registered with SAFE prior to exercise / settlement of the Options. If the Company is unable to obtain registration approval or is required to obtain further approvals on behalf of a member of the Company Group, the exercise or settlement of the Options may be suspended or delayed. Further, the Company is under no obligation to vest the Options and/or issue Shares upon exercise if the Company’s SAFE approval becomes invalid or ceases to be in effect by the time the Options are exercised.

Notwithstanding any provision in the Agreement or the Plan to the contrary, pursuant to Section 2.6(a) of the Agreement, unless and until the Company determines otherwise, the method of exercise of the Option shall be limited to a mandatory cashless, sell-all exercise method.

Termination

Notwithstanding any provision in the Agreement or the Plan to the contrary, the Participant acknowledges and agrees that any vested Options that are exercisable at the time of the Participant’s Termination will expire 90 (ninety) daysafter the Participant incurs a Termination.

Exchange Control Information

The Participant understands and agrees that, to facilitate compliance with exchange control requirements, the Participant will be required to immediately repatriate to China the cash proceeds from the cashless sell-all exercise of the Options. The Participant further understands that, under local law, such repatriation of the cash proceeds will be effectuated through a special exchange control account established by the Company or one of its Subsidiaries in China, and the Participant hereby consents and agrees that the cash proceeds related to the Participant’s participation in the Plan may be transferred to such special account prior to being delivered to the Participant. The Company may deliver the proceeds to the Participant in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid in U.S. dollars, the Participant understands that he or she will be required to set up a U.S. dollar bank account in China so that the proceeds may be deposited into this account. If the proceeds are converted to local currency, there may be delays in delivering the proceeds to the Participant. The Participant agrees to bear the risk of any currency fluctuation between the time the Shares are sold and the time such proceeds are distributed to the Participant through the special exchange control account.

The Participant further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control requirements in China.

COLOMBIA

Nature of Grant.

This provision supplements Article III (“Nature of Grant”) of the Agreement:

The Participant acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the Options and related benefits do not constitute a component of the Participant’s “salary” for any legal purpose. Therefore, the Options and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amount which may be payable.

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Securities Law Notification.

The Shares are not and will not be registered in the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and, therefore, the Shares may not be offered to the public in Colombia. Nothing in this document should be construed as the making of a public offer of securities in Colombia.

FRANCE

Terms and Conditions.

Consent to Receive Information in English. In accepting the Options, the Participant confirms having read and understood the documents relating to this grant (the Plan and this Agreement), which were provided in the English language. The Participant accepts the terms of those documents accordingly.

Consentement à recevoir des informations en anglais. En acceptant l'Option, le participant confirme ainsi avoir lu et compris les documents relatifs à cette attribution (le Plan U.S. et ce Contrat d’Attribution) qui ont été communiqués en langue anglaise. Le participant accepte les termes en connaissance de cause.

The following provisions apply only if the Participant is eligible to be granted French-qualified Options under the Rules of the Baxter International Inc. 2021 Incentive Plan for Stock Options and Restricted Stock Units Granted to Participants in France (the “French Sub-Plan”). If the Participant is ineligible to be granted French-qualified Options under the French Sub-Plan, the Options will not qualify for the special French tax and social security treatment under Sections L. 225-177 to L. 225-186 and Sections L. 22-10-56 to L. 22-10-58 of the French Commercial Code, as amended.

Type of Grant. The Options are granted as French-qualified Options and are intended to qualify for the special tax and social security treatment in France under Sections L. 225-177 to L. 225-186 and Sections L. 22-10-56 to L. 22-10-58 of the French Commercial Code, as amended. The French-qualified Options are granted subject to the French Sub-Plan.

Certain events may affect the status of the Options as French-qualified Options, and the French-qualified Options or the underlying Shares may be disqualified in the future. The Company does not make any undertaking or representation to maintain the qualified status of the French-qualified Options or of the underlying Shares. Capitalized terms not defined herein, in the Agreement or the Plan shall have the meanings ascribed to them in the French Sub-Plan.

Holding Periods for Managing Corporate Officers. If on the Effective Grant Date (as defined in the French Sub-Plan) the Participant qualifies as a managing corporate officer under French law (“mandataires sociaux”) or any similar official capacity of the Company or a qualifying related company, the Participant may not sell 20% of the Shares acquired upon exercise of the French-qualified Options until the termination of such official capacity, as long as this restriction is applicable to French-qualified Options.

No Transfer of French-qualified Options. The French-qualified Options may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of in any manner during the Participant’s lifetime and upon death only in accordance with Section II.4 of the French Sub-Plan, and only to the extent required by applicable laws (including the provisions of Sections L. 225-177 to L. 225-186 and Sections L. 22-10-56 to L. 22-10-58 of the French Commercial Code, as amended).

Term of the Options. Notwithstanding anything in the Plan or the Agreement, the French-qualified Options will expire nine (9) years and six (6) months from the Effective Grant Date (as defined in the French Sub-Plan), unless sooner terminated, forfeited, or canceled in accordance with the provisions of the Plan or the Agreement.

Termination Due to Death. Notwithstanding anything in the Plan or the Agreement, in the event of the Participant’s Termination due to death prior to the satisfaction of the vesting conditions set forth in the vesting schedule of the Grant Notice, any portion of the French-qualified Options that have not vested as

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of such date will immediately vest and the Participant’s rights under the French-qualified Options may be exercised by the Participant’s legal heirs within six (6) months of the date of death. If the Participant’s heirs do not exercise the unexercised portion of the French-qualified Options within six (6) months of the date of death, the unexercised portion of the French-qualified Options will terminate and be forfeited.

Notifications.

Foreign Asset/Account Reporting Information. If the Participant is a French resident and holds Shares outside of France or maintain a foreign bank account, the Participant is required to report such account opened, held, used or closed abroad during all or part of an applicable fiscal year to the French tax authorities when filing the Participant’s tax return.

HONG KONG

Important Notice.

Securities Warning: The contents of the Grant Notice, the Agreement, this Non-U.S. Addendum, the Plan, and all other materials pertaining to the Options and/or the Plan have not been reviewed by any regulatory authority in Hong Kong. The Participant is hereby advised to exercise caution in relation to the offer thereunder. If the Participant has any doubts about any of the contents of the aforesaid materials, the Participant should obtain independent professional advice. The Options and any Shares issued in respect of the Options do not constitute a public offering of securities under Hong Kong law and are available only to eligible employees under the Plan. The Grant Notice, the Agreement, including this Non-U.S. Addendum, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The Options and any documentation related thereto are intended solely for the Participant’s personal use and may not be distributed to any other person.

Lapse of Restrictions.

If, for any reason, Shares are issued to the Participant within six (6) months of the Date of Grant, the Participant agrees that he or she will not sell or otherwise dispose of any such Shares prior to the six-month anniversary of the Date of Grant.

Settlement in Shares.

Notwithstanding anything to the contrary in this the Grant Notice, the Agreement, this Non-U.S. Addendum or the Plan, the Options shall be settled only in Shares (and may not be settled in cash).

INDONESIA

Language Consent

By accepting the Options, the Participant (i) confirms having read and understood the documents relating to the grant (i.e., the Plan and the Agreement) which were provided in the English language, (ii) accepts the terms of those documents accordingly, and (iii) agrees not to challenge the validity of this document based on Law No. 24 of 2009 on National Flag, Language, Coat of Arms and National Anthem or the implementing Presidential Regulation (when issued).

Persetujuan Bahasa

Dengan menerima pemberian Opsi Saham, anda (i) memberikan konfirmasi bahwa anda telah membaca dan memahami dokumen-dokumen berkaitan dengan pemberian ini (yaitu, Program dan Perjanjian) yang disediakan dalam Bahasa Inggris, (ii) menerima persyaratan di dalam dokumen-dokumen tersebut, dan (iii) setuju untuk tidak mengajukan keberatan atas keberlakuan dari dokumen ini berdasarkan Undang-Undang No. 24 Tahun 2009 tentang Bendera, Bahasa dan Lambang Negara serta Lagu Kebangsaan ataupun Peraturan Presiden sebagai pelaksanaannya (ketika diterbitkan).

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ISRAEL

Exercise of Options.

The following provision supplements Section 2.6(a) of the Agreement:

If Shares are delivered to the Participant pursuant to Section 2.6(a) of the Agreement, the Company reserves the right to require that the Participant sell all Shares underlying the Options, either immediately upon exercise of the Options or upon the Participant’s Termination, to facilitate compliance with tax withholding obligations in Israel.

In this regard, the Participant agrees that the Company is authorized to instruct its designated broker to assist with any such mandatory sale of Shares (on the Participant’s behalf pursuant to this authorization), and the Participant expressly authorizes the designated broker to complete the sale of such Shares. The Participant also agrees to sign any agreements, forms and/or consents that may be reasonably requested by the Company (or the designated broker) to effectuate the sale of the Shares and shall otherwise cooperate with the Company with respect to such matters, provided that the Participant shall not be permitted to exercise any influence over how, when or whether the sales occur. The Participant acknowledges that the designated broker is under no obligation to arrange for the sale of the Shares at any particular price. Due to fluctuations in the Share price and/or applicable exchange rates between the date the Shares are delivered to the Participant and (if later) the date on which the Shares are sold, the amount of proceeds ultimately distributed to the Participant may be more or less than the market value of the Shares on the exercise date or the date the shares are delivered to the Participant.

Upon the sale of the Shares, the cash proceeds from the sale of Shares (less any applicable Tax-Related Items, brokerage fees or commissions) will be delivered to the Participant in accordance with applicable laws and regulations.

Securities Law Notification. This offer of Options does not constitute a public offering under the Securities Law, 1968.

ITALY

Method of Exercise of Options

Notwithstanding any provision in the Agreement or the Plan to the contrary, pursuant to Section 2.6(a) of the Agreement, unless and until the Company determines otherwise, the method of exercise of the Option shall be limited to a mandatory cashless, sell-all exercise method.

Plan Document Acknowledgment.

By accepting the Options, the Participant acknowledges that he or she has received a copy of the Plan, the Agreement and the Notice and has reviewed the Plan, the Agreement, including this Non-U.S. Addendum, and the Grant Notice in their entirety and fully understands and accepts all provisions of the Plan, the Agreement, including this Non-U.S. Addendum, and the Grant Notice.

The Participant further acknowledges that he or she has read and specifically and expressly approves the following provisions of the Agreement: (i) Impact of Termination on the Options; (ii) Exercise of Options; (iii) Tax Withholding; (iv) Governing Law; Venue; (v) Electronic Delivery and Acceptance; (vi) the Nature of Grant; (vii) Data Privacy and (vii) the Vesting Schedule in the Grant Notice.

MEXICO

Plan Document Acknowledgement

By accepting the Options, the Participant acknowledges that he or she has received a copy of the Plan, the Grant Notice, and the Agreement, including this Non-U.S. Addendum, which the Participant has

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reviewed. The Participant acknowledges further that he or she accepts all the provisions of the Plan, the Grant Notice, and the Agreement, including this Non-U.S. Addendum. The Participant also acknowledges that he or she has read and specifically and expressly approves the terms and conditions set forth in Article III (“Nature of Grant”) in the Agreement, which clearly provides as follows:

(1)    The Participant’s participation in the Plan does not constitute an acquired right;

(2)    The Plan and the Participant’s participation in it are offered by the Company on a wholly discretionary basis;

(3)    The Participant’s participation in the Plan is voluntary; and

(4)    No member of the Company Group is responsible for any decrease in the value of any Shares acquired at exercise and settlement of the Options.

Labor Law Policy and Acknowledgment

By accepting the Options, the Participant expressly recognizes that the Company, with registered offices at One Baxter Parkway, Deerfield, Illinois, 60015, USA, is solely responsible for the administration of the Plan and that the Participant’s participation in the Plan and acquisition of Shares do not constitute an employment relationship between the Participant and the Company since the Participant is participating in the Plan on a wholly commercial basis and his or her sole employer is Baxter México, S. de R.L de C MEX (“Baxter Mexico”). Based on the foregoing, the Participant expressly recognizes that the Plan and the benefits that he or she may derive from participating in the Plan do not establish any rights between the Participant and the employer, Baxter Mexico, and do not form part of the employment conditions and/or benefits provided by Baxter Mexico, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Participant’s employment.

The Participant further understands that his or her participation in the Plan is as a result of a unilateral and discretionary decision of the Company; therefore, the Company reserves the absolute right to amend and/or discontinue the Participant’s participation at any time without any liability to the Participant.

Finally, the Participant hereby declares that he or she does not reserve to him- or herself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and the Participant therefore grants a full and broad release to the Company, and its subsidiaries, branches, representative offices, shareholders, directors, officers, employees, agents, or legal representatives with respect to any claim that may arise.

Spanish Translation

Reconocimiento del Documento del Plan

Al aceptar las Opción Sobre Acciones Restringidas (Options, por sus siglas en inglés), el Participante reconoce que ha recibido una copia del Plan, el Anuncio de la Subvención y el Acuerdo, con inclusión de este Anexo A, que el Participante ha revisado. El Participante reconoce, además, que acepta todas las disposiciones del Plan, el Anuncio de la Subvención, y en el Acuerdo, incluyendo este Anexo A. El Participante también reconoce que ha leído y que concretamente aprueba de forma expresa los términos y condiciones establecidos en la Sección 1 (“Naturaleza de la Subvención”) del Acuerdo, que claramente dispone lo siguiente:

(1)    La participación del Participante en el Plan no constituye un derecho adquirido;

(2)    El Plan y la participación del Participante en el Plan se ofrecen por la Compañía en su discrecionalidad total;

(3)    Que la participación del Participante en el Plan es voluntaria; y

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(4)    La Compañía y sus Empresas Matrices, Subsidiarias y Afiliadas no son responsables de ninguna disminución en el valor de las acciones adquiridas al conferir las Options.

Política Laboral y Reconocimiento

Al aceptar las Options, el Participante expresamente reconoce que la Compañía, con sus oficinas registradas y ubicadas en One Baxter Parkway, Deerfield, Illinois, 60015, USA, es la única responsable por la administración del Plan y que la participación del Participante en el Plan y en su caso la adquisición de Acciones no constituyen una relación de trabajo entre el Participante y la Compañía, ya que el Participante participa en el Plan en un marco totalmente comercial y su único patrón es Baxter México, S. de R.L de C MEX (“Baxter Mexico”). Derivado de lo anterior, el Participante expresamente reconoce que el Plan y los beneficios que pudieran derivar de la participación en el Plan no establecen derecho alguno entre el Participante y el patrón, Baxter Mexico, y no forma parte de las condiciones de trabajo y/o las prestaciones otorgadas por Baxter Mexico, y que cualquier modificación al Plan o su terminación no constituye un cambio o desmejora de los términos y condiciones de la relación de trabajo del Participante.

Asimismo, el Participante reconoce que su participación en el Plan se ha resultado de una decisión unilateral y discrecional de la Compañía; por lo tanto, la Compañía se reserva el derecho absoluto de modificar y/o terminar la participación del Participante en cualquier momento y sin responsabilidad alguna frente el Participante.

Finalmente, el Participante por este medio declara que no se reserva ninguna derecho o acción en contra de la Compañía por cualquier compensación o daños y perjuicios en relación de las disposiciones del Plan o de los beneficios derivados del Plan, y por lo tanto, el Participante otorga el más amplio finiquito que en derecho proceda a la Compañía, y sus filiales, oficinas de representación, accionistas, directores, autoridades, empleados, agentes, o representantes legales en relación con cualquier demanda que pudiera surgir.

Securities Law Notification.

The Options granted, and any Shares acquired, under the Plan have not been registered with the National Register of Securities maintained by the Mexican National Banking and Securities Commission and cannot be offered or sold publicly in Mexico. In addition, the Plan, the Agreement and any other document relating to the Options may not be publicly distributed in Mexico. These materials are addressed to the Participant because of the Participant’s existing relationship with the Company and any Subsidiary, and these materials should not be reproduced or copied in any form. The offer contained in these materials does not constitute a public offering of securities but rather constitutes a private placement of securities addressed specifically to individuals who are present employees of Baxter Mexico made in accordance with the provisions of the Mexican Securities Market Law, and any rights under such offering shall not be assigned or transferred.

PORTUGAL

Language Consent. The Participant hereby expressly declares that he or she has full knowledge of the English language and has read, understood and freely accepted and agreed with the terms and conditions established in the Plan and the Agreement.

Conhecimento da Língua. Pela presente, o Participante declara expressamente que tem pleno conhecimento da língua inglesa e que leu, compreendeu e livremente aceitou e concordou com os termos e condições estabelecidas no Plano e no Acordo (Agreement em inglés).

RUSSIA

Securities Law Information

This Agreement, the Plan and all other materials the Participant may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. Absent any requirement under

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local law, the issuance of Shares under the Plan has not and will not be registered in Russia and hence the shares described in any Plan-related documents may not be offered or placed in public circulation in Russia.

U.S. Transaction

The Participant understands that the Options and any Shares under the Plan are to be issued and sold solely in the United States. Any Shares issued to the Participant upon exercise of the Options shall be delivered to the Participant’s brokerage account in the United States, where such Shares must be held until the time of sale. In no event will Shares be delivered to the Participant in Russia.

Anti-Corruption Information

Anti-corruption laws prohibit certain public servants, their spouses and their dependent children from owning any foreign source financial instruments (e.g., shares of foreign companies such as the Corporation). Accordingly, the Participant should inform the Company if he or she is covered by these laws because the Participant should not hold Shares acquired under the Plan.

Labor Law Information

If the Participant continues to hold Shares acquired at exercise of the Options after an involuntary Termination, he or she may not be eligible to receive unemployment benefits in Russia.

SINGAPORE

Securities Law Notification.

The Options are being granted pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Hence, statutory liability under the SFA in relation to the content of prospectuses will not apply. The Participant should note that the Options are subject to section 257 of the SFA and hence the Options may not be offered or sold, or made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore, unless such offer, sale or invitation is made (i) more than six (6) months from the Date of Grant, (ii) pursuant to the exemptions under Part XIII Division 1 Subdivision (4) (other than section 280) of the SFA, or (iii) pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.

In addition, the Participant understands that he or she is permitted to sell Shares acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside of Singapore through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange (the “NYSE”).

Director Notification Requirement.

If the Participant is a director, alternate director, substitute director or shadow director1 of a Singapore Subsidiary, the Participant must notify the Singapore Subsidiary in writing within two (2) business days of (i) becoming the registered holder of or acquiring an interest (e.g., Options, Shares, etc.) in the Company or any Subsidiary, or becoming an alternate director, substitute director or shadow director (as the case may be), whichever occurs last, or (ii) any change in a previously disclosed interest (e.g., sale of Shares). If the Participant is the chief executive officer (“CEO”) of a Singapore Subsidiary and the above notification requirements are determined to apply to the CEO of a Singapore Subsidiary, the above notification requirements also may apply to the Participant.

1 A shadow director is an individual who is not on the board of directors of the Singapore Subsidiary but who has sufficient control so that the board of directors of the Singapore Subsidiary acts in accordance with the directions or instructions of the individual.

11

SPAIN

Termination and Nature of Grant.

This provision supplements Section 2.4 (“Impact of Termination on Options”) of the Agreement and Article III (“Nature of Grant”) of the Agreement:

In accepting the grant of Options, the Participant consents to participation in the Plan and acknowledges that the Participant has received a copy of the Plan.

The Participant understands and agrees that, unless otherwise provided in the Agreement, the Participant will forfeit any Options that have not vested as of the date of the Participant’s Termination ends without entitlement to the underlying Shares or to any amount of indemnification in the event of the Participant’s Termination for any reason including, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause (i.e., subject to a “despido improcedente”), individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment or service under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, and/or Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985.

The Participant understands that the Company has unilaterally, gratuitously and in its own discretion decided to grant Options under the Plan to certain individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not bind the Company or a Subsidiary, other than as set forth in the Agreement. Consequently, the Participant understands that the Options are granted on the assumption and condition that the Options and any Shares acquired upon exercise of the Options are not a part of any employment contract (either with the Company or a Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation), or any other right whatsoever. Further, the Participant understands that the Options would not be granted to the Participant but for the assumptions and conditions referred to above; thus, the Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken, or should any of the conditions not be met for any reason, any grant of or right to the Options shall be null and void.

Securities Law Notification.

No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory in connection with the grant of Options under the Plan. Neither the Plan, the Agreement (which includes this Non-U.S. Addendum), nor the Grant Notice have been nor will they be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission), and they do not constitute a public offering prospectus.

SWEDEN

Tax Withholding.

The following provision supplements Section 2.8 (“Tax Withholding”) of the Agreement:

Without limiting the Company’s and the Employer’s authority to satisfy their withholding obligations for Tax-Related Items as set forth in Section 2.8 of the Award Agreement, in accepting the grant of Options, the Participant authorizes the Company and/or the Employer to withhold Shares or to sell Shares otherwise deliverable to the Participant upon exercise/settlement to satisfy Tax-Related Items, regardless of whether the Company and/or the Employer have an obligation to withhold such Tax-Related Items.

12

SWITZERLAND

Securities Law Notification.

Neither this document nor any other materials relating to the Options constitute a prospectus according to article 35 et seq. of the Swiss Federal Act on Financial Services (“FinSA”), and neither this document nor any other materials relating to the Options may be publicly distributed nor otherwise made publicly available in Switzerland to any person other than an employee of a member of the Company Group. Neither this document nor any other offering or marketing material relating to the Options have been or will be filed with, or approved or supervised by, any Swiss reviewing body according to article 51 FinSA or any Swiss regulatory authority (in particular, the Swiss Financial Market Supervisory Authority (FINMA)).

TAIWAN

Securities Law Notification.

The offer of participation in the Plan is available only for employees of the Company and its Subsidiaries. The offer of participation in the Plan is not a public offer of securities by a Taiwanese company.

TURKEY

Securities Law Notification.

The sale of Shares acquired under the Plan is not permitted within Turkey. The sale of Shares acquired under the Plan must occur outside Turkey and through the facilities of a stock exchange on which the Shares are listed. The Shares are currently listed on the New York Stock Exchange (“NYSE”).

UNITED ARAB EMIRATES

Nature of Grant.

This provision supplements Article III (“Nature of Grant”) of the Agreement:

The Participant acknowledges that the Options and related benefits do not constitute a component of the Participant’s “wages” for any legal purpose. Therefore, the Options and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as social insurance contributions and/or any other labor-related amounts which may be payable.

Securities Law Notification.

The Agreement, the Grant Notice, the Plan and other incidental communication materials concerning the Options are intended for distribution only to employees of the Company or its Subsidiaries. The Dubai Creative Clusters Authority (formerly known as the Dubai Technology and Media Free Zone Authority), Emirates Securities and Commodities Authority and/or the Central Bank of the United Arab Emirates has no responsibility for reviewing or verifying any documents in connection with the Options. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved these communications nor taken steps to verify the information set out in them, and have no responsibility for them.

Further, the Shares underlying the Options may be illiquid and/or subject to restrictions on their resale. The Participant should conduct his or her own due diligence on the Options and the Shares. If the Participant is in any doubt about any of the contents of the grant or other incidental documents, the Participant should obtain independent professional advice.

13

UNITED KINGDOM

Withholding. This provision supplements Section 2.8 of the Agreement:

Without limitation to Section 2.8 of the Agreement, the Participant agrees that he or she is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items, as and when requested by the Company or, if different, the Employer or by Her Majesty’s Revenue & Customs (“HMRC”) (or any other tax authority or any other relevant authority). The Participant also agrees to indemnify and keep indemnified the Company and, if different, the Employer against any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Participant’s behalf.

Notwithstanding the foregoing, if the Participant is a director or executive officer (within the meaning of Section 13(k) of the Exchange Act), the Participant understands that he or she may not be able to indemnify the Company for the amount of any income tax not collected from or paid by the Participant within ninety (90) days of the end of the U.K. tax year in which the event giving rise to the Tax-Related Items occurs, as it may be considered to be a loan and, therefore, it may constitute a benefit to the Participant on which additional income tax and National Insurance contributions (“NICs”) may be payable. The Participant understands that he or she will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company and/or the Employer (as appropriate) the amount of any NICs due on this additional benefit, which may also be recovered from the Participant by any of the means referred to in Section 2.8 of the Agreement.

*    *    *    *

14

EXHIBIT B

Baxter International Inc.

Incentive Compensation Recoupment Policy

1.0    Introduction

This policy applies to all cash bonuses paid by Baxter International Inc. (the “Company”) and its subsidiaries under its 2007 Incentive Plan, or any successor Plan, and all grants of equity awarded by the Company to any person who is not designated as an officer by the Board of Directors of the Company. Cash bonuses and grants of equity made to such officers are covered by the Executive Compensation Recoupment Policy. Collectively such cash bonuses and equity awards will be referred to as “Incentive Compensation”. Equity awards are any compensatory awards under the company’s equity compensation plans in the form of common stock or any derivative of common stock, including stock options, stock awards, restricted stock, restricted stock units, and performance share units.

2.1Triggers; Scope of Actions

2.2Following a restatement of the Company’s financial results requiring an amendment to any previously filed results, the Chairman and CEO (the “CEO”) will review the facts and circumstances that led to the requirement for the restatement and take any actions it deems appropriate with respect to Incentive Compensation. The CEO will consider whether an employee received compensation based on performance reported but not actually achieved or was accountable for the events that led to the restatement, including any misconduct.

2.3If an employee violates any of the restrictive covenants contained in any agreement between the employee and the Company, the Chairman and CEO will review the facts and circumstances related to the violation and take any actions it deems appropriate with respect to Incentive Compensation.

2.4Actions that may be taken include: recovery, reduction, or forfeiture of all or part of any Incentive Compensation previously provided or to be provided in the future; disciplinary actions; and the pursuit of any other remedies.

3.0    Documentation

This Policy will apply to Equity Plans covering any employee beginning with the Company’s 2011 Equity Plans. In addition, this Policy will be incorporated into the Company’s Management Incentive Compensation Program (MICP) beginning with the Company’s 2011 MICP, as well as any resolutions adopted by the Board or Compensation Committee as a condition to approval of the payout of any cash bonus under the 2007 Incentive Plan, or any successor Plan, beginning with the cash bonuses paid by the Company in March 2012.

15

EXHIBIT B

Baxter International Inc.

Executive Compensation Recoupment Policy

(As amended and restated on March 8, 2018)

1.0    Introduction

This policy (as amended and restated, this “Policy”) applies to all cash bonuses paid by Baxter International Inc. (the “Company”) under its 2007 Incentive Plan, or any successor Plan, and all grants of equity awarded by the Company to any person designated as an officer by the Board of Directors of the Company (the “Board”). Collectively such bonuses and equity awards will be referred to as “Executive Incentive Compensation”. Equity awards are any compensatory awards under the company’s equity compensation plans in the form of common stock or any derivative of common stock, including stock options, stock awards, restricted stock, restricted stock units, and performance share units. For the avoidance of doubt, this Policy shall apply to any person who is a designated officer either at the time of grant or the time of payment of the Executive Incentive Compensation.

2.0     Triggers; Scope of Actions

2.1Following a restatement of the Company’s financial results requiring an amendment to any previously filed results, the Board will review the facts and circumstances that led to the requirement for the restatement and take any actions it deems appropriate with respect to Executive Incentive Compensation. The Board will consider whether an officer received compensation based on performance reported but not actually achieved or was accountable for the events that led to the restatement, including any misconduct.

2.2If an officer violates any of the restrictive covenants contained in any agreement between the officer and the Company, the Board will review the facts and circumstances related to the violation and take any actions it deems appropriate with respect to Executive Incentive Compensation.

2.3Actions the Board may take include: recovery, reduction, or forfeiture of all or part of any Executive Incentive Compensation previously provided or to be provided in the future; disciplinary actions; and the pursuit of any other remedies.

3.0    Documentation

This Policy will be incorporated into future Equity Plans covering any officer beginning with the Company’s 2009 Equity Plan as well as resolutions adopted by the Board or Compensation Committee as a condition to approval of the payout of any cash bonus under the 2007 Incentive Plan, or any successor Plan, to any officer beginning with the cash bonuses paid by the Company in March 2009. The Executive Compensation team will provide a copy of this Policy to each officer.

4.0    Disclosure

In the event the Board recoups incentive compensation under this Policy, Company management intends to disclose the aggregate amount of incentive compensation recovered under this Policy, so long as the underlying event has already been publicly disclosed publicly by the Company. This disclosure would appear in the Company’s annual proxy statement following any such Board action and would provide the aggregate amount of recovery for each event if there is more than one applicable event.

*    *    *    *

16

EX-10.4

Exhibit 10.4

PRIVATE & CONFIDENTIAL

Andrew Frye

10 June 2019 Dear Andrew,

Employment Agreement

With reference to the recent discussion, Baxter Healthcare (Asia) Pte Ltd (the “Company”), is pleased to offer you employment under this Employment Agreement (“Agreement”) and as follows:

1.Conditions to Offer:

This offer is contingent upon:

a)your securing a valid work pass for employment in Singapore; and

b)your resignation from your employment with Baxter Healthcare (Thailand) Co., Ltd.

2.Position and Report

Your job title is SVP & President, APAC. During the term of your employment, the Company may assign you to different roles or position within the organization upon consultation with you.

You will continue to report to Jose Almeida, Chairman, CEO & President.

Your normal place of work is at the Company's office in Singapore but this will vary from time to time depending on the nature of your duties or upon reasonable instruction or direction of the Company. The official hours of work for the Company are 9:00 am to 6:00 pm (including an hour of lunch break) from Monday to Friday inclusive, with Saturdays and Sundays being rest days although you acknowledge that you will be able to work such hours as may be required for the proper performance of your duties without any further remuneration apart from that provided for in this Agreement.

3.Effective Transfer Date

Subject to your receipt of a valid work pass to work for the Company in Singapore, your transfer to the Company shall be effective on 1 August 2019 or any date which is mutually agreed between the Company and you in writing (“Effective Date”).

By your agreement to transfer to the Company on the Effective Date, you hereby accept and agree that your employment with Baxter Healthcare (Thailand) Co., Ltd. shall terminate by reason of your resignation on 31 July 2019.

Whilst your years of service with Baxter Healthcare (Thailand) Co., Ltd. will be recognized for the purposes of computing contractual and statutory benefits and entitlements under this Agreement, all contractual and statutory benefits and entitlements under your employment with Baxter Healthcare (Thailand) Co., Ltd. will cease with effect from 31 July 2019 and all contractual and

Baxter Healthcare (Asia) Pte Ltd    initials

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927    Page 1 of 14

statutory benefits and entitlements are set out in this Agreement.

4.Salary, Bonus, Transportation Allowance and Benefits

a.Basic Salary & Annual Wage Supplement (AWS):

You will be paid a salary of S$71,923.00 per month. Your annual basic salary shall be S$935,000.00 per annum, inclusive of a 13th month annual wage supplement ("AWS"). To qualify for the AWS of any given year, you are required to have been continuously and actively employed by the Company up through 1 January of the following year. For 2019, your AWS will be prorated based on the Effective Date.

b.Salary Review:

Your annual basic salary shall be subject to an annual review in accordance with Company policy. Your next salary review is in April 2020 and each year in April thereafter, in accordance with the practice for all employees in Singapore.

c.Transport Allowance:

You will be eligible for transport allowance of S$4,000.00 per month or S$48,000.00 (per annum) and is subject to the Company’s transport allowance policy as may be amended by the Company from time to time. The transport allowance, being a fixed and regular amount, is compensation income subject to income tax or any other tax levied on compensation.

d.MICP Plan:

You will continue to be eligible to participate in the Management Incentive Compensation Program (MICP) with a bonus target of 75% of your annual salary.

To qualify for the MICP in any given year, you are required to have been continuously employed by the Company through 1st February of the following year. The actual bonus you will receive will vary depending on both business performance and your individual assessment for the year.

Your business region is Global Baxter. Please note that any payout under the MICP is dependent on the satisfaction of certain conditions and shall be at the absolute discretion of the Company. Any decision made by the Company with regards to such payout in any given year or period shall be final and binding.

e.CPF Special Allowance (in lieu of Singapore Social Security Contribution – CPF):

You will receive a special ex-gratia monthly allowance equivalent to the employer’s contribution as specified under the rules, terms and conditions that define Central Provident Fund (“CPF”) by way of payment of an additional 17% of your Salary capped at SGD 1,020 per month (the "CPF Ex-Gratia"). This fixed monthly allowance is not subject to the annual merit cycle and will remain constant during your employment in Singapore. This allowance will be subject to Singapore Income Tax. Upon you attaining Singapore permanent residency or Singapore citizenship, the CPF Ex-Gratia will cease and the Company will instead make CPF contributions according to the prevailing CPF contribution rates as stipulated by applicable laws and regulations directly to your CPF Account and the Company shall be entitled to recover from you the employee’s share of the contribution amount permitted in accordance with the Central Provident Fund Act, (Cap. 36) (if applicable).

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Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

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f.Annual Leave:

In addition to gazetted public holidays, your annual leave entitlement will be 30 days. You will not be able to use your annual leave to offset notice periods unless approved by the Company. For the avoidance of doubt, any annual leave you were entitled to during your employment with Baxter Healthcare (Thailand) Co., Ltd. will cease upon your resignation with Baxter Healthcare (Thailand) Co., Ltd.

g.Other Benefits:

You will be eligible for employee benefits and other employment programs offered by the Company which includes life and medical insurance as per the attached Schedule. For the avoidance of doubt, any benefit or employment programs administered by the Company shall be subject to amendment by the Company from time to time and any change shall be effective when implemented by the Company. Please note that such implementation is usually effective when published on the Baxter intranet website and may not be personally notified to all employees.

Save as expressly set out in this Agreement, you shall not be entitled to any other salary, compensation or benefit of any kind.

5.Deductions

To the extent permitted by law, the Company shall be entitled to deduct: (a) any amounts owed to the Company by you from your Salary; (b) any contributions to the Chinese Development Assistance Council Fund, the Eurasian Community Fund, the Mosque Building and Mendaki Fund and the Singapore Indian Development Association Fund (as may be applicable); (c) any other deductions which may be made as set out in the Employment Act, on termination of employment, you owe any money to the Company, the Company shall be entitled to deduct any such money from any Salary due to you to the extent permitted by law.

6.Taxes

You shall be fully responsible for all income tax or any other tax levied on your compensation under this Agreement under any competent jurisdiction.

7.Company Policies

You must also comply with all Company’s policies, including the Baxter Code of Conduct, which are applicable to all Affiliates of the Company, which shall be deemed to be incorporated by reference into this Agreement. You further acknowledge that Baxter and its Affiliates, being a leading health-care corporation, have a special obligation to ensure that our behavior as a company, and the actions of our employees meet the highest standards of business conduct. Please note that failure by you to comply with any such policy will be regarded as a breach of your employment under this Agreement and you may be subject to disciplinary or other actions of the Company. “Affiliates” means all companies under the common control of Baxter Corporation Inc.

8.Employee Handbook

In addition to the terms in this Agreement, you are also bound by the terms of the Company’s Employee Handbook which may be amended from time to time without prior notice. In the event of a conflict, the terms of this Agreement shall take precedence.

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Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

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9.Termination:

(a)The Company and you may terminate this Agreement without assigning any reason by giving three months’ written notice or payment in lieu of notice. In the event the Company terminates you in accordance with Section 19(d) herein assuming that you are not terminated pursuant to Section 9(b) below, you shall be entitled to 18 months of severance pay.

(b)Despite the forgoing provisions, the Company reserves the right to terminate your employment without notice in the event the Company, after due inquiry (if required under the Employment Act (Cap. 91)) of Singapore), considers that you have committed any act of gross misconduct or serious breach of the terms of this Agreement including, but not limited to, the following reasons:

(i)for your dishonest performance of duties or an intentional criminal offense against the Company;

(ii)if you intentionally cause damage to the Company;

(iii)if you violate the Company’s work rules, regulations or lawful and justifiable orders and a written warning thereof has previously been given by the Company, except in a serious case where the warning is not necessary. The written warning shall be effective for a period of 1 year from the date of the commission of the violation by you;

(iv)if your negligence causes serious damage to the Company;

(v)if you are sentenced to imprisonment by a final judgment. In this case, if it is an offense committed through negligence or petty offense, it must be a case where such offense has caused damage to the Company; and/or

(vi)if you cease to have the right to work in Singapore.

(c)In case that the Company terminates your employment for any reason other than provided in Section 9(b), the Company shall compensate you for:

(i)accrued annual leave for the previous year; and

(ii)unused annual leave calculated as of the termination date for the year of termination.

Notwithstanding anything in this Agreement, the Company however will not compensate you for any annual leave accrued during your employment with Baxter Healthcare (Thailand) Co., Ltd.

(d)You acknowledge and agree that your employment under this Agreement may be terminated according to the CIC Agreement (defined below).

(e)For the avoidance of doubt, the payment of severance pay shall not affect your entitlement to any of the following:

(i)any accrued but unpaid salary;

(ii)any payment in lieu of accrued but unused holiday; or

(iii)the reimbursement of expenses, provided that all claims for reimbursement are submitted within four weeks after your termination from employment,

in relation, in each case, to the period before your termination from employment.

initials

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Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

(f)Upon resignation or termination, all items belonging to the Company must be returned. Such items would include, but are not limited to, any drawings, notebooks, manuals, documents, computerization of technical data, customer lists, specifications files, memoranda or other records of any nature belonging to the Company or any reproduction thereof which may have been provided to you during the course of your employment with the Company, and you shall not undertake or cause any action or deed to be done which might in any way affect the Company’s reputation of good standing or those of its products or services.

10.No Pre-existing Restrictions

Your acceptance of employment under this Agreement confirms that you have no obligations, oral or in writing, with any of your former employers which restrict your ability to be employed by the Company. You understand that your continued employment is contingent upon this representation. Additionally, the Company has not made this offer of employment to you in order to obtain from you any confidential or trade secret information of your former employers, and the Company will not ask you to use or disclose such confidential and trade secret information in your Baxter employment. Indeed, you have a continuing obligation not to use or disclose the confidential and trade secret information of your former employers, and, by entering into Baxter employment, you acknowledge that you will not use or disclose any of the confidential and trade secret information of your former employers.

11.Confidentiality & Restrictive Covenants

Under this Agreement and after termination thereof, you agree to use any and all confidential information, with which you may or will become familiar as a result of your employment with the Company only for the benefit of the Company or its affiliates and not to disclose it to any third parties, except in the necessary course of business for and on behalf of the Company or its affiliates. All information relating to the Company or its affiliates that is not generally known to the public (including any product or pricing information, client contacts or other client related information, any information relating to the Company’s or its affiliate’s operations, business or market strategy) disclosed to you in the course of your employment in the Company remains the property of the Company and you must not use such information in any way other than in the discharge of your duties to the Company.

Given the confidential information with which you may or will become familiar as a result of your employment with the Company and the significant value of such information to the Company, you agree that, in the event of your leaving the Company’s employment for any reason, for a period of one year thereafter, within the geographic limits which, Baxter Asia Pacific, and any of their competitors are or would be in actual competition:

i.not to directly or indirectly render services (either by employment or otherwise) to any such competitors of the Company or its affiliates; and

ii.not to directly or indirectly divert or seek to divert business from the Company, its affiliates and any of the customers of the Company and its affiliates; and

iii.not to induce, attempt to induce, or assist another to induce or attempt to induce any person to terminate his/her employment with the Company or its affiliates or to work for you or for any other person or entity.

(c)Intellectual Property

i.The parties acknowledge that you may create Inventions (whether alone or jointly) in the course of your employment with the Company and that you have a special obligation to further the interests of the Company in relation to such Inventions.

Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

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Page 5 of 14

Subject to the terms of the Copyright Act (Cap. 63), the Patent Act (Cap. 221), the Registered Designs Act (Cap. 266) and any other relevant laws, you must, promptly following creation, disclose to the Company all such Inventions and works embodying Intellectual Property of the Company (“Company Intellectual Property”).

ii.You acknowledge that (except to the extent prohibited by or ineffective in law) all Company Intellectual Property and materials embodying them automatically belong to the Company as from creation for the full term of those rights and (except to the extent prohibited by or ineffective in law), you now assign, by way of present and future assignment, any and all the right, title and interest to the Company (or its nominee).

iii.To the extent that any Company Intellectual Property does not vest in the Company automatically pursuant to this clause 11(c) (and except to the extent prohibited by or ineffective in law), You hold such property on trust for the Company absolutely and hereby grant to the Company an exclusive, royalty free licence to use such property in its discretion until such Company Intellectual Property fully vests in the Company.

iv.To the extent that any Inventions created by you (whether alone or jointly) at any time during the course of your employment are prohibited by or prevented in law from automatically vesting with the Company pursuant to this clause 11. You must, immediately upon creation of such rights, grant the Company a right of first refusal, in writing, to acquire them on arm's length terms to be agreed between the parties.

v.You confirm that you have disclosed all Prior Works to the Company. To the extent that no such disclosures have been made, you confirm there are no Prior Works.

vi.If in the course of your employment with the Company, you incorporate into a Company product, process or machine a Prior Work owned by you or in which you have an interest, the Company will have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify, use and sell such Prior Work as part of or in connection with such product, process or machine. you acknowledge that the Salary and other benefits that the Company provides to you include consideration for the granting of such license.

vii.If any Company Intellectual Property is considered by the Company to be patentable, you are obliged, at the Company's written request, to assist the Company in applying at the Company's expense for the necessary patents. You agree:

A.to execute all such documents, both during and after your employment, as the Company may require to vest in the Company all right, title and interest pursuant to this Agreement;

B.to provide all such information and assistance and do all such further things as the Company may require to enable it to protect, maintain and exploit the Company Intellectual Property to the best advantage, including (without limitation), at the Company's request, applying for the protection of Inventions throughout the world;

C.to assist the Company in applying for the registration of any registrable Company Intellectual Property, enable it to enforce the Company Intellectual Property against third parties and to defend claims for infringement of third party Intellectual Property Rights;

D.not to apply or cause others to apply for the registration of any Company Intellectual Property in Singapore or any other part of the world without the prior written consent of the Company; and

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Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

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E.to keep confidential all Company Intellectual Property unless the Company has consented in writing to its disclosure by you.

viii.You acknowledge that, except as provided by any applicable laws, no further remuneration or compensation, other than that provided for in this Agreement, is or may become due to you in respect of your compliance with this clause.

ix.You must do nothing (whether by act or omission) during your employment or at any time thereafter to affect or imperil the validity of any Company Intellectual Property or Inventions.

x.Discretion as to prosecution, registration or exploitation of any Company Intellectual Property or Invention will be at the sole discretion of the Company. You agree without additional payment to do all such further things and execute (as a deed or otherwise) all such documents as the Company may reasonably require for the purposes of the prosecution of, or any proceedings concerning, any patent, Company Intellectual Property or Invention including, without limitation, the validity or infringement of it.

xi.You irrevocably appoint the Company as your attorney in your name to sign, execute, do or deliver on your behalf any deed, document or other instrument and to use your name for the purpose of giving full effect to this clause.

xii.Rights and obligations under this Agreement will continue in force after termination of this Agreement in respect of any Company Intellectual Property and will be binding on your representatives.

xiii.You voluntarily and unconditionally consent to all or any acts or omissions by the Company, or persons authorized by the Company, in relation to works which would otherwise infringe your moral rights.

xiv.You waive any and all existing and future moral rights in the works as against the Company, its successors and assigns and any licensee.

xv.You acknowledge that you have given this consent voluntarily and without reliance on any statement or representation made by the Company or anyone acting on the Company's behalf.

For the purposes of this clause, the following definitions shall apply: (I) "Intellectual Property Rights" means patents, Inventions, copyright and related rights, trademarks, trade names, service marks and domain names, rights in get-up, goodwill, rights to sue for passing off, design rights, semi-conductor topography rights, database rights, confidential information, moral rights, proprietary rights and any other Intellectual Property Rights in each case whether registered or unregistered and including all applications or rights to apply for, and renewals or extensions of such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world; (II) "Inventions" means any invention, idea, discovery, development, improvement or innovation, processes, formulae, models or prototypes, whether or not patentable or capable of registration, and whether or not recorded in any medium (including, without limitation, any improvement thereto) and (III) "Prior Works" mean all Inventions and any patents, inventions, original works of authorship, developments, improvements, and trade secrets which you discovered, created, or made prior to your employment with the Company relating to the Company's actual, proposed or anticipated business, products or research and development, and which you have not assigned to the Company.

12.Personal Data

For the purposes of this Clause, “Personal Data” refers to all data, whether true or not, about an

Page 7 of 14

Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

initials

individual who can be identified from that data or from that data and other information to which the Company has or is likely to have access. Such data includes but is not limited to contact information (e.g. name, address, telephone number and email address) and billing information (e.g. bank account details, NRIC, passport or other equivalent identification number).

The Company recognises and respects your privacy rights with regard to Personal Data acquired during the course of your employment and for the purposes of managing or terminating your employment relationship with the Company and you hereby consent to the Company's collection, use, disclosure and processing of your Personal Data.

As evidence of its commitment to privacy, the Company collects, uses, discloses and processes Personal Data in accordance with the Singapore Personal Data Protection Act (No. 26 of 2012), it's Personal Data Protection Policy and other policies and procedures to ensure that respect for privacy is a key part of Baxter company culture and operations.

The Company reserves the right to update and amend the terms of its Personal Data Protection Policy and other policies and procedures from time to time in compliance with local legislation and/or to meet its global policy requirements and for any other purpose deemed reasonable by the Company. The Company will notify you of any amendments via announcements in an appropriate manner.

If you do not agree to the amended terms, you should inform the Company as soon as possible of the terms to which you do not consent. Pending such notice, if there is any inconsistency between these terms and the amended terms, the amended terms will prevail to the extent of the inconsistency.

If you would like to obtain a copy of the Company’s Personal Data Protection Policy, access your Personal Data, correct or update your Personal Data, or if you have any concerns or queries about the treatment of your Personal Data, or if you have any complaints about any of the foregoing matters, please contact the Company’s Human Resource Department or Baxter’s Data Protection Officer.

Baxter’s Data Protection Officer may be contacted at

Baxter International Inc.

Chief Privacy Officer, Global Privacy Office One Baxter Parkway Deerfield, IL 60015-4625

Contact No.: 1-800-294-5418

Email address: privacy@baxter.com

13.Continuing Effect

The termination of this Agreement howsoever arising shall not operate to affect such of the provisions hereof as are expressed to operate or have effect thereafter and shall be without prejudice to any other accrued rights or remedies of the parties.

14.Entire Agreement

This Agreement, together with the prevailing Company policies, CIC Agreement and addendums, forms the entire agreement between you and the Company in relation to your employment with the Company.

This Agreement supersedes and entirely extinguishes all other oral or written understandings and agreements, arrangements and representations, express or implied, relating to your employment with the Company that may have existed prior to the date of this Agreement. Any such oral or written understandings and agreements, arrangements and representations, express or implied, shall be deemed to have been terminated by mutual consent.

initials

Page 8 of 14

Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

15.Severability

If any term in this Agreement is determined by a competent authority to be invalid, unlawful or unenforceable, then such term shall to that extent only be severed from the remaining terms and conditions in this Agreement which shall continue to be valid and enforceable to the fullest extent permitted by law.

16.Rights of Third Parties

Save for any affiliate of the Company, no person other than you and the Company shall have any rights under the Contracts (Rights of Third Parties) Act (Cap. 53B) to enforce any of the terms in this Agreement.

17.Remedies and Waivers

No failure on the part of any party hereto to exercise, and no delay in exercising any right under this Agreement will operate as a waiver thereof, nor will any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or of the exercise of any other right. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

Any waiver or consent given by any party under this Agreement shall be in writing and may be given subject to such conditions as such party may impose. Any waiver or consent shall be effective only in the instance and for the purpose for which it is given.

18.Governing Law and Dispute Resolution

This Agreement shall be governed by and construed in accordance with the laws of Singapore.

Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre ("SIAC Rules") for the time being in force, which rules are deemed to be incorporated by reference in this clause. The Tribunal shall consist of one arbitrator. The language of the arbitration shall be English.

19.Other Provisions:

(a)You will continue to be eligible for a special agreement in the event of a change in control of the Company (“CIC Agreement”). You will receive a new CIC Agreement based upon your Singapore employment.

(b)If the CIC Agreement does not apply to the termination of your employment, if your employment is terminated by the Company, other than for any of the reasons listed in Section 9(b) herein or due to poor performance or disability, the Company will provide you not more than sixty days following your termination of employment with a lump sum separation payment equal to 18 months’ base salary and bonus target (less any severance benefits payable under any applicable Baxter plan or benefit), provided that you have properly executed within forty-five days following the date of termination and not revoked a customary release of claims in a form reasonably acceptable to the Company. You hereby agree that this lump sum is inclusive of your statutory payments under Singapore laws, e.g. compensation in lieu of advance notice, severance pay, untaken annual leave, repatriation

Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

initials

Page 9 of 14

expenses, if any. You also agree that you, in accepting the benefits under this clause, shall have no right whatsoever to make any claim for any other payments or compensations from the Company and shall have no right to make any complaint to or bringing proceedings before any court or authority in respect of the Agreement against the Company including the claim in relation to unfair employment termination. The capitalized terms in this paragraph have the meanings provided in the CIC Agreement without regard to whether a change in control has occurred. This provision will remain effective unless and until the Company adopts a formal severance plan for the executive leadership team for which you are eligible.

(c)You will be required to own a minimum of Baxter stock equal to four times your base salary. You will have five years from your official Officer appointment to achieve this ownership level.

We are confident that you will continue to make a significant contribution to the team at Baxter and the Company as a whole. We look forward to working with you in expanding our businesses in this strategically important market. Please feel free to call us if you have any questions with regard to the terms of this offer.

Please express your agreement and acceptance of the employment details, terms and conditions by signing the original copy of this letter and returning it to the Company. This employment offer expires on 17 June 2019 at 5pm.

Yours faithfully,

for Baxter Healthcare (Asia) Pte Ltd

Director, Human Resources SEA & Global Functions - APAC

ACCEPTANCE & ACKNOWLEDGEMENT BY:

I have read this Agreement and accept employment on the terms and conditions stated above:
Name:    Andrew R Frye	Date:    July 1, 2018
Signature:	NRIC/ Passport No:

initials

Page 10 of 14

Baxter Healthcare (Asia) Pte Ltd

150 Beach Road #30-01/08, Gateway West, Singapore 189720

T (65) 6826 1900 F (65) 6222 9927

EX-10.5

Exhibit 10.5

Date:    June 10, 2019

To:    Andrew Frye

RE:    Baxter Equity

You will continue to be eligible to participate in the Long-Term Incentive (LTI) Program for senior management in accordance with the terms of the LTI program. The next LTI grant is currently scheduled for March 2020. Your equity target will be USD 1,400,000. The LTI Program delivers this value through a mix of 50% stock options and 50% performance share units. The Company’s equity targets are assessed annually and are subject to change based on market competitiveness and the company’s financial performance. Therefore, your equity target in the future may be greater or less than what is stated in this letter. Your actual equity grant will be based on the equity target for your level and an assessment of your individual performance and potential.

In order to receive these grants (both stock options and RSUs), you will need to sign a Singapore Non- Competition, Non-Solicitation and Confidentiality Agreement (“Agreement”) following the grants.

The terms of this addendum are deemed incorporated to your employment agreement dated August 1, 2019.

I have read this Agreement and accept the terms and conditions stated above:

	July 1, 2019
Andrew Frye	Date

1

Initials

EX-10.6

Exhibit 10.6

DATE:    June 10, 2019

TO:    Andrew Frye

Addendum to Singapore Employment Contract Dear Andy,

Congratulations on your upcoming International Transfer. This letter outlines the provisions relating to your relocation and general transition to Singapore.

TRANSFER OF EMPLOYMENT

•All conditions in the Company’s International Transfer Policy apply to your move unless otherwise specified in this letter.

•Any employment contracts you may have had with a subsidiary, division or facility of Baxter outside do not transfer or otherwise apply to your Singapore employment (including, without limitation, your employment agreement with Baxter Healthcare (Thailand) Co. Ltd (the “Contract”) which terminated by reason of your resignation on July 31, 2019.

•Your original hire date of July 1, 2017 under the Contract will be used for future service awards, severance calculations and any applicable contractual or statutory entitlements in Singapore, if applicable.

TAX

•You will be responsible for Singapore taxes relating to any income received as of the effective date of your international transfer. You will also be responsible for Singapore and Thailand taxes relating to any compensation, awards, or benefits granted prior to the effective date of your international transfer, but received after the effective date. From a Baxter perspective, these items of income would include base salary, annual incentive payments, stock options income realized at exercise or sale, restricted stock and other equity awards, benefit plan distributions and other Company-earned income.

•You will receive Singapore, U.S. and Thailand tax preparation services, as required, for the duration you are employed with Baxter Singapore. In the event, you separate from Baxter Singapore, you will receive tax preparation services for the tax year that aligns with the effective date of your separation.

Additionally, you will receive tax consultations through Baxter’s designated tax preparation firm.

RELOCATION

•The Company will assist you with the relocation expenses listed below. Upon acceptance, a representative from our relocation vendor will be contacting you to initiate your relocation process. You and any eligible family members will have one year from the date of transfer to use these benefits.

▪Household Good Shipment Support – The Company will provide you a shipment of goods to include a sea shipment (up to two 40ft containers) and air shipment (equivalent up to 450 kg).

▪Immigration Support – The Company will assist with the documentation for you and your family members, where eligible, to live and work in Singapore.

1

▪Settling-In Services – The Company will provide a program to help you settle into your new location, including finding a new rental, signing a lease, etc.

▪Taxes – The Company will pay any taxes assessed in your new country on these relocation benefits and services.

•The Company has committed considerable resources to develop a program that will benefit you during your relocation. You are asked to take part in this partnership and complete the relocation repayment agreement prior to beginning the relocation process. The Company’s Relocation Vendor, Aires, will collect the agreement electronically through their system.

MOBILITY BENEFITS

•The Company will provide you a monthly housing allowance of SGD 16,000 during your employment with Baxter in Singapore. You are responsible for maintaining your housing lease, making all rent payments, and paying for any other costs associated with the housing (i.e. utilities, security deposit, etc.) The Company’s designated relocation vendor will make the monthly rental payments to the bank account and currency of your choice. This allowance will not transition to any future Baxter employment outside of Singapore.

•The Company will reimburse actual registration, tuition fees, and transportation to/from school for your child through high school graduation. No uniforms, books, lunches, field trips, tutoring or extracurricular

activities will be reimbursed. The Company’s designated relocation vendor will make the reimbursement to

the bank account and currency of your choice.

•The Company will enroll you and your immediate family members in the Company’s Offshore medical and dental programs. Additionally, you will be enrolled in a life insurance and accidental death and dismemberment (AD&D) program. The Company will pay the cost of the insurance premiums and you will be responsible for any copays and deductibles. Dependent children up to age 26 can be covered under the medical and dental program.

•You hereby agree that these Mobility Benefits (i.e. housing allowance, schooling, and benefit coverage) are purely provided by the Company for your welfare and not in any way considered as wage under any applicable employment law.

•The terms of this addendum are deemed incorporated to your employment agreement dated August 1, 2019.

Accepted By:    Date

Jul 9, 2019

Andrew Frye

2

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as Amended

I, José E. Almeida, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Baxter International Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ José E. Almeida

José E. Almeida

Chairman of the Board and

Chief Executive Officer

Date: April 28, 2022

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as Amended

I, James K. Saccaro, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Baxter International Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ James K. Saccaro

James K. Saccaro

Executive Vice President and Chief Financial Officer

Date: April 28, 2022

EX-32.1

EXHIBIT 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

José E. Almeida, as Chairman of the Board and Chief Executive Officer of Baxter International Inc. (the “Company”), certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ José E. Almeida

José E. Almeida

Chairman of the Board and

Chief Executive Officer

April 28, 2022

EX-32.2

EXHIBIT 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

James K. Saccaro, as Executive Vice President and Chief Financial Officer of Baxter International Inc. (the “Company”), certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James K. Saccaro

James K. Saccaro

Executive Vice President and Chief Financial Officer

April 28, 2022

XML

Cover - shares	3 Months Ended
	Mar. 31, 2022	Apr. 21, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	1-4448
Entity Registrant Name	BAXTER INTERNATIONAL INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-0781620
Entity Address, Address Line One	One Baxter Parkway,
Entity Address, City or Town	Deerfield,
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60015
City Area Code	224.
Local Phone Number	948.2000
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		503,528,678
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000010456
Current Fiscal Year End Date	--12-31
Common Stock, $1.00 par value | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	BAX (NYSE)
Security Exchange Name	NYSE
Common Stock, $1.00 par value | Chicago Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	BAX (NYSE)
Security Exchange Name	CHX
0.4% Global Notes due 2024 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	0.4% Global Notes due 2024
Trading Symbol	BAX 24
Security Exchange Name	NYSE
1.3% Global Notes due 2025 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	1.3% Global Notes due 2025
Trading Symbol	BAX 25
Security Exchange Name	NYSE
1.3% Global Notes due 2029 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	1.3% Global Notes due 2029
Trading Symbol	BAX 29
Security Exchange Name	NYSE
3.95% Global Notes due 2030 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	3.95% Global Notes due 2030
Trading Symbol	BAX 30
Security Exchange Name	NYSE
1.73% Global Notes due 2031 | New York Stock Exchange
Document Information [Line Items]
Title of 12(b) Security	1.73% Global Notes due 2031
Trading Symbol	BAX 31
Security Exchange Name	NYSE

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 2,294	$ 2,951
Accounts receivable, net of allowances of $129 in 2022 and $122 in 2021	2,471	2,629
Inventories	2,548	2,453
Prepaid expenses and other current assets	860	839
Total current assets	8,173	8,872
Property, plant and equipment, net	5,114	5,178
Goodwill	9,816	9,836
Other intangible assets, net	7,693	7,792
Operating lease right-of-use assets	609	630
Other non-current assets	1,311	1,213
Total assets	32,716	33,521
Current liabilities:
Short-term debt	200	301
Current maturities of long-term debt and finance lease obligations	209	210
Accounts payable	1,223	1,246
Accrued expenses and other current liabilities	2,258	2,479
Total current liabilities	3,890	4,236
Long-term debt and finance lease obligations, less current portion	16,765	17,149
Operating lease liabilities	508	522
Other non-current liabilities	2,434	2,493
Total liabilities	23,597	24,400
Commitments and contingencies
Equity:
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2022 and 2021	683	683
Common stock in treasury, at cost,180,058,105 shares in 2022 and 181,879,516 shares in 2021	(11,422)	(11,488)
Additional contributed capital	6,207	6,197
Retained earnings	16,994	17,065
Accumulated other comprehensive (loss) income	(3,387)	(3,380)
Total Baxter stockholders’ equity	9,075	9,077
Noncontrolling interests	44	44
Total equity	9,119	9,121
Total liabilities and equity	$ 32,716	$ 33,521

XML

Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for accounts receivable, current	$ 129	$ 122
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	2,000,000,000	2,000,000,000
Common stock, issued (in shares)	683,494,944	683,494,944
Treasury stock, shares (in shares)	180,058,105	181,879,516

XML

Condensed Consolidated Statements of Income (unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Net sales	$ 3,707	$ 2,946
Cost of sales	2,359	1,801
Gross margin	1,348	1,145
Selling, general and administrative expenses	1,052	627
Research and development expenses	150	128
Other operating income, net	(17)	0
Operating income	163	390
Interest expense, net	85	34
Other (income) expense, net	(16)	5
Income before income taxes	94	351
Income tax expense	21	51
Net income	73	300
Net income attributable to noncontrolling interests	2	2
Net income attributable to Baxter stockholders	$ 71	$ 298
Earnings per share
Basic (in dollars per share)	$ 0.14	$ 0.59
Diluted (in dollars per share)	$ 0.14	$ 0.58
Weighted-average number of shares outstanding
Basic (in shares)	503	505
Diluted (in shares)	509	511

XML

Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 73	$ 300
Other comprehensive income (loss), net of tax:
Currency translation adjustments, net of tax expense (benefit) of ($11) and $17 for the three months ended March 31, 2022 and 2021, respectively.	(15)	(208)
Pension and other postretirement benefits, net of tax expense of $3 and $8 for the three months ended March 31, 2022 and 2021, respectively.	9	30
Hedging activities, net of tax expense (benefit) of ($1) and $3 for the three months ended March 31, 2022 and 2021, respectively.	(2)	12
Debt securities, net of tax expense of $1 and zero for the three months ended March 31, 2022 and 2021, respectively	1	0
Total other comprehensive loss, net of tax	(7)	(166)
Comprehensive income	66	134
Less: Comprehensive income attributable to noncontrolling interests	2	2
Comprehensive income attributable to Baxter stockholders	$ 64	$ 132

XML

Condensed Consolidated Statements of Comprehensive Income (unaudited) (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Currency translation adjustments, tax	$ (11)	$ 17
Pension and other postretirement benefits, tax	3	8
Hedging activities, tax	(1)	3
Debt securities, tax	$ 1	$ 0

XML

Condensed Consolidated Statements of Changes in Equity (unaudited) - USD ($) $ in Millions	Total	Total Baxter stockholders' equity	Common stock	Common stock in treasury	Additional contributed capital	Retained earnings	Accumulated other comprehensive income (loss)	Noncontrolling interests
Balance, beginning of period (in shares) at Dec. 31, 2020			683,000,000
Balance, beginning of period (in usd) at Dec. 31, 2020	$ 8,726	$ 8,689	$ 683	$ (11,051)	$ 6,043	$ 16,328	$ (3,314)	$ 37
Balance, beginning of period, treasury (in shares) at Dec. 31, 2020				179,000,000
Gains (losses)
Net income	300	298				298		2
Other comprehensive income (loss)	(166)	(166)					(166)
Purchases of treasury stock (in shares)				4,000,000
Purchases of treasury stock	(300)	(300)		$ (300)	0
Stock issued under employee benefit plans and other (in shares)				(2,000,000)
Stock issued under employee benefit plans and other	55	55		$ 55	0
Dividends declared on common stock	(124)	(124)				(124)
Change in noncontrolling interests	(1)							(1)
Balance, end of period (in shares) at Mar. 31, 2021			683,000,000
Balance, end of period (in usd) at Mar. 31, 2021	$ 8,490	8,452	$ 683	$ (11,296)	6,043	16,502	(3,480)	38
Balance, end of period, treasury (in shares) at Mar. 31, 2021				181,000,000
Balance, beginning of period (in shares) at Dec. 31, 2021	683,494,944		683,000,000
Balance, beginning of period (in usd) at Dec. 31, 2021	$ 9,121	9,077	$ 683	$ (11,488)	6,197	17,065	(3,380)	44
Balance, beginning of period, treasury (in shares) at Dec. 31, 2021	181,879,516			182,000,000
Gains (losses)
Net income	$ 73	71				71		2
Other comprehensive income (loss)	$ (7)	(7)					(7)
Purchases of treasury stock (in shares)	3,600,000
Stock issued under employee benefit plans and other (in shares)				(2,000,000)
Stock issued under employee benefit plans and other	$ 76	76		$ 66	10
Dividends declared on common stock	(142)	(142)				(142)
Change in noncontrolling interests	$ (2)							(2)
Balance, end of period (in shares) at Mar. 31, 2022	683,494,944		683,000,000
Balance, end of period (in usd) at Mar. 31, 2022	$ 9,119	$ 9,075	$ 683	$ (11,422)	$ 6,207	$ 16,994	$ (3,387)	$ 44
Balance, end of period, treasury (in shares) at Mar. 31, 2022	180,058,105			180,000,000

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Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions		3 Months Ended
		Mar. 31, 2022	Mar. 31, 2021
Cash flows from operations
Net income		$ 73	$ 300
Adjustments to reconcile net income to cash flows from operations:
Depreciation and amortization		380	217
Deferred income taxes		(55)	(25)
Stock compensation		32	22
Net periodic pension and other postretirement costs		14	26
Other		(12)	14
Changes in balance sheet items:
Accounts receivable, net		153	51
Inventories		(105)	(129)
Prepaid expenses and other current assets		(13)	2
Accounts payable		5	22
Accrued expenses and other current liabilities		(221)	(124)
Other		(43)	1
Cash flows from operations		208	377
Cash flows from investing activities
Capital expenditures		(140)	(171)
Acquisitions, net of cash acquired, and investments		(174)	(381)
Other investing activities, net		10	14
Cash flows from investing activities		(304)	(538)
Cash flows from financing activities
Repayments of debt		(404)	0
Net decreases in debt with original maturities of three months or less		(45)	0
Cash dividends on common stock		(140)	(125)
Proceeds from stock issued under employee benefit plans		66	48
Purchases of treasury stock		0	(253)
Other financing activities, net		(25)	(28)
Cash flows from financing activities		(548)	(358)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash		(13)	(31)
Decrease in cash, cash equivalents and restricted cash		(657)	(550)
Cash, cash equivalents and restricted cash at beginning of period	[1]	2,956	3,736
Cash, cash equivalents and restricted cash at end of period	[1]	2,299	3,186
Cash and cash equivalents		2,294	3,182
Restricted cash included in prepaid expenses and other current assets		$ 5	$ 4

[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 March 31, 2022, December 31, 2021, and March 31, 2021 (in millions): March 31, 2022December 31, 2021March 31, 2021Cash and cash equivalents$2,294 $2,951 $3,182 Restricted cash included in prepaid expenses and other current assets5 5 4 Cash, cash equivalents and restricted cash$2,299 $2,956 $3,186 

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote 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, 2021 (2021 Annual Report).

In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation 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.

Risks and Uncertainties Related to COVID-19 and Global Economic Conditions

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and continue to take. Initial measures taken in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in medical procedures in 2020. The pandemic has created significant volatility in the demand for our products. For further information about our revenues by product category, refer to Note 9. Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic. For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron variants, subvariants and other virus mutations as well as vaccine distribution and hesitancy. The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees, moratoriums on elective procedures and mandatory quarantines and travel restrictions). Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility. We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the pandemic and other exogenous factors (including significant weather events, disruptions to certain ports of call around the world and certain geopolitical events) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods. Many of our manufacturing plant and distribution center personnel are currently unvaccinated, and we may also experience employee resistance in complying with current and future government vaccine and testing mandates, which may cause labor shortages significantly impacting manufacturing production and distribution center productivity. We expect that these challenges as well as evolving governmental restrictions and requirements, among other factors, may continue to have an adverse effect on our business.

New Accounting Standards

Recently adopted accounting pronouncements

As of January 1, 2022, we adopted Accounting Standards Update (ASU) 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement. These changes are intended to avoid recognizing a day-one loss for a lease with variable payments even though the lessor expects the arrangement will be profitable overall. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements.

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ACQUISITIONS AND OTHER ARRANGEMENTS

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

ACQUISITIONS AND OTHER ARRANGEMENTS

ACQUISITIONS AND OTHER ARRANGEMENTS

Hillrom

On December 13, 2021, we completed our acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion. Including the assumption of Hillrom's outstanding debt, the enterprise value of the transaction was approximately $12.8 billion. Under the terms of the transaction agreement, Hillrom shareholders received $156.00 in cash per outstanding Hillrom common share.

The following table summarizes the fair value of the total consideration paid:

(in millions)
Cash consideration paid to Hillrom shareholders(a)	$	10,474
Fair value of equity awards issued to Hillrom equity award holders(b)	2
Total Consideration	$	10,476

(a) Represents cash consideration transferred of $156.00 per outstanding Hillrom common share to existing shareholders and holders of equity awards that vested at closing pursuant to their original terms.

(b) Represents the pre-acquisition service portion of the fair value of 668 thousand replacement restricted stock units issued to Hillrom equity award holders at closing.

The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2022. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for acquired intangible assets, goodwill and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date.The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:

(in millions)
Assets acquired and liabilities assumed
Cash and cash equivalents	$	399
Accounts receivable	590
Inventories	557
Prepaid expenses and other current assets	49
Property, plant and equipment	502
Goodwill	6,795
Other intangible assets	6,029
Operating lease right-of-use assets	74
Other non-current assets	125
Short-term debt	(250)
Accounts payable	(140)
Accrued expenses and other current liabilities	(552)
Long-term debt and finance lease obligations	(2,118)
Operating lease liabilities	(57)
Other non-current liabilities	(1,527)
Total assets acquired and liabilities assumed	$	10,476

In the first quarter of 2022, we recorded measurement period adjustments to increase other intangible assets of $7 million, increase deferred income tax liabilities of $11 million, other individually insignificant adjustments for a net

decrease to assets acquired and liabilities assumed of $6 million and a corresponding increase to goodwill of $10 million. The measurement period adjustments did not have a significant impact our results of operations.

The goodwill, which is not deductible for tax purposes, includes the value of an assembled workforce as well as the overall strategic benefits provided to our product portfolio and is included in the Hillrom segment.

For the three months ended March 31, 2022, we recognized $159 million of incremental costs of sales from the fair value step-ups on acquired Hillrom inventory that was sold in the current period.

Other Business Development Activities

In March 2022, we entered into an agreement with a subsidiary of Pfizer Inc. to acquire the rights to Zosyn, a premixed frozen piperacillin-tazobactam product, in the U.S. and Canada. Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia. Under the terms of the acquisition, we paid the acquisition price of $122 million currently, received specified intellectual property, including patent rights, in the current period and will receive additional intellectual property, including the product rights to Zosyn, in one year. Under the arrangement, we are entitled to receive profit sharing payments from sales of Zosyn until the product rights transfer to us in March 2023.

The transaction has been accounted for as an asset acquisition, as substantially all of the fair value of the assets being acquired under the arrangement was concentrated in the product rights that we will receive, which we classify as a developed technology intangible asset. Accordingly, the $122 million purchase price was primarily allocated to the developed technology intangible asset class and will be amortized over an estimated useful life of 9 years.

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SUPPLEMENTAL FINANCIAL INFORMATION

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUPPLEMENTAL FINANCIAL INFORMATION

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 months ended March 31, 2022 and 2021.

	Three months ended March 31,
(in millions)	2022		2021
Balance at beginning of period	$	122	$	125
Charged to costs and expenses	6		1
Write-offs	(1)		—
Currency translation adjustments	2		(6)
Balance at end of period	$	129	$	120

Inventories

(in millions)	March 31, 2022		December 31, 2021
Raw materials	$	656	$	591
Work in process	285		300
Finished goods	1,607		1,562
Inventories	$	2,548	$	2,453

Property, Plant and Equipment, Net

(in millions)	March 31, 2022		December 31, 2021
Property, plant and equipment, at cost	$	11,757	$	11,728
Accumulated depreciation	(6,643)		(6,550)
Property, plant and equipment, net	$	5,114	$	5,178

Interest Expense, Net

	Three months ended March 31,
(in millions)	2022		2021
Interest expense, net of capitalized interest	$	88	$	37
Interest income	(3)		(3)
Interest expense, net	$	85	$	34

Other (Income) Expense, Net

	Three months ended March 31,
(in millions)	2022		2021
Foreign exchange (gains) losses, net	$	(11)	$	(3)
Pension and other postretirement benefit plans	(5)		4
Other, net	—		4
Other (income) expense, net	$	(16)	$	5

Non-Cash Operating and Investing Activities

Right-of-use operating lease assets obtained in exchange for lease obligations for the three months ended March 31, 2022 and 2021 were $14 million and $5 million, respectively.

Purchases of property, plant and equipment included in accounts payable as of March 31, 2022 and 2021 were $53 million and $63 million, respectively.

There were no unsettled share repurchases as of March 31, 2022. Unsettled share repurchases included in accrued expenses and other current liabilities were $47 million as of March 31, 2021.

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GOODWILL AND OTHER INTANGIBLE ASSETS, NET

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following is a reconciliation of goodwill by business segment.

(in millions)	Americas		EMEA		APAC		Hillrom		Total
Balance as of December 31, 2021	$	2,517	$	309	$	224	$	6,786	$	9,836
Acquisition accounting adjustments	—		—		—		10		10
Currency translation	(29)		(3)		(3)		5		(30)
Balance as of March 31, 2022	$	2,488	$	306	$	221	$	6,801	$	9,816

As of March 31, 2022, there were no reductions in goodwill relating to impairment losses.

Other intangible assets, net

The following is a summary of our other intangible assets.

(in millions)	Customer relationships		Developed technology, including patents		Other amortized intangible assets		Indefinite-lived intangible assets		Total
March 31, 2022
Gross other intangible assets	$	3,457	$	3,883	$	340	$	2,140	$	9,820
Accumulated amortization	(262)		(1,638)		(227)		—		(2,127)
Other intangible assets, net	$	3,195	$	2,245	$	113	$	2,140	$	7,693
December 31, 2021
Gross other intangible assets	$	3,437	$	3,801	$	344	$	2,140	$	9,722
Accumulated amortization	(162)		(1,556)		(212)		—		(1,930)
Other intangible assets, net	$	3,275	$	2,245	$	132	$	2,140	$	7,792

Intangible asset amortization expense was $217 million and $64 million for the three months ended March 31, 2022 and 2021, respectively.

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FINANCING ARRANGEMENTS

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

Significant Debt Activity

In March 2022, we repaid $170 million of our $2.0 billion three-year term loan facility and $175 million of our $2.0 billion five-year term loan facility. The loss from the early extinguishment of this debt was not significant.

Credit Facilities

Our U.S. dollar-denominated revolving credit facility has a capacity of $2.5 billion and 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 March 31, 2022 or December 31, 2021.

Commercial Paper

As of March 31, 2022, we had $200 million of commercial paper outstanding with a weighted-average interest rate of 0.5% and an original weighted-average term of 89 days. As of December 31, 2021, we had $300 million of commercial paper outstanding with a weighted-average interest rate of 0.27% and an original weighted-average term of 88 days.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

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, 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 March 31, 2022 and December 31, 2021, our total recorded reserves with respect to legal and environmental matters were $57 million and $72 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 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 an ongoing environmental remediations associated with historic operations at certain of our facilities. As of March 31, 2022 and December 31, 2021, our environmental reserves, which are measured on an undiscounted basis, were $18 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 August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011.

In November 2019, we and certain of our officers were named in a class action complaint captioned Ethan E. Silverman et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased shares of our common stock during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter common stock between February 21, 2019 and October 23, 2019. The plaintiff alleged that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to certain intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses, as well as our internal controls over financial reporting. On January 29, 2020, the Court appointed Varma Mutual Pension Insurance Company and Louisiana Municipal Police Employees Retirement System as lead plaintiffs in the case. Plaintiffs filed an amended complaint on June 25, 2020 containing substantially the same allegations. On August 24, 2020, we filed a motion to dismiss the amended complaint. On January 12, 2021, the Court granted our motion to dismiss the amended complaint but gave plaintiffs an opportunity to file a further-amended complaint. The parties reached an agreement to settle the case for $16 million, subject to the completion of confirmatory discovery and final approval by the Court. The Court granted final approval of the settlement on August 11, 2021 and the settlement became effective on September 13, 2021.

As initially disclosed in our Form 8-K on October 24, 2019, we voluntarily advised the staff of the SEC of an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchanges gains and losses. We also received a stockholder request for inspection of our books and records in connection with the October 24, 2019 announcement. The Company has cooperated with the staff of the SEC in its investigation into related matters, and on February 18, 2022, we reached a settlement with the SEC. Without admitting or denying the findings in the administrative order issued by the SEC, we agreed to pay a civil penalty of $18 million and to cease and desist from violations of specified provisions of the federal securities laws and related rules. In the order, the SEC acknowledged the Company’s cooperation. We paid the penalty in the first quarter of 2022.

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 agreement to settle these lawsuits in the third quarter of 2021 for amounts that are not material to our financial results, which were paid in the fourth quarter of 2021. The settlement of these claims does not preclude potential future lawsuits.

In July 2021, Hill-Rom, Inc. 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. Hillrom has been working with the DHHS and the DOJ to provide information responsive to the subpoena. Hillrom also voluntarily began a related internal review and Hillrom and now Baxter have been cooperating fully with the DHHS and the DOJ with respect to these matters.

The DHHS often issues this type of subpoena 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, 2 and 3 of The Sherman Antitrust Act of 1890 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.

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STOCKHOLDERS’ EQUITY

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Stock-Based Compensation

Stock compensation expense totaled $32 million and $22 million in the first quarter of 2022 and 2021, respectively. Approximately 75% of stock compensation expense is classified within selling, general and administrative (SG&A) expense with the remainder classified in cost of sales and research and development (R&D) expense.

We awarded stock compensation grants which consisted of 1.8 million stock options, 1.2 million restricted stock units (RSUs) and 0.4 million performance stock units (PSUs) during the first quarter of 2022. The grant date fair values of stock options, RSUs and PSUs awarded in the first quarter of 2022 were $33 million, $102 million and $34 million, respectively. Stock options and RSUs generally vest in one-third increments over a three-year period. The vesting conditions for PSUs granted are equally divided based on our compound annual sales growth rate performance, our adjusted return on invested capital performance and on our stock performance relative to a specified peer group. All of the PSUs vest at the end of the applicable three-year service period.

Stock Options

The weighted-average Black-Scholes assumptions used in establishing the fair value of stock options granted during the period, along with weighted-average grant date fair values, were as follows:

	Three months ended March 31,
	2022			2021
Expected volatility	24		%	25		%
Expected life (in years)	5.5			5.5
Risk-free interest rate	1.8		%	0.8		%
Dividend yield	1.3		%	1.3		%
Fair value per stock option	$	18		$	16

The total intrinsic value of stock options exercised was $27 million and $21 million during the first quarters of 2022 and 2021, respectively.

As of March 31, 2022, the unrecognized compensation cost related to all unvested stock options of $80 million is expected to be recognized as expense over a weighted-average period of 1.9 years.

RSUs

As of March 31, 2022, the unrecognized compensation cost related to all unvested RSUs of $163 million is expected to be recognized as expense over a weighted-average period of 2.2 years.

PSUs

As of March 31, 2022, the unrecognized compensation cost related to all unvested PSUs of $50 million is expected to be recognized as expense over a weighted-average period of 1.9 years.

Cash Dividends

Cash dividends declared per share for the three months ended March 31, 2022 and 2021 were $0.28 and $0.245, respectively.

Stock Repurchase Programs

In July 2012, the Board of Directors authorized the repurchase of up to $2.0 billion of our common stock. The Board of Directors increased this authority by an additional $1.5 billion in each of November 2016 and February 2018, by an additional $2.0 billion in November 2018 and by an additional $1.5 billion in October 2020. During the first quarter of 2022, we did not repurchase any shares under this authority. During the first quarter of 2021, we repurchased 3.6 million shares under this authority pursuant to a Rule 10b5-1 plan. We had $1.3 billion remaining available under the authorization as of March 31, 2022.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income, currency translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans and gains and losses on cash flow hedges.

The following table is a net-of-tax summary of the changes in accumulated other comprehensive (loss) income (AOCI) by component for the three months ended March 31, 2022 and 2021.

(in millions)	CTA		Pension and OPEB plans		Hedging activities		Debt securities		Total
Gains (losses)
Balance as of December 31, 2021	$	(2,907)	$	(347)	$	(126)	$	—	$	(3,380)
Other comprehensive income (loss) before reclassifications	(15)		2		(1)		1		(13)
Amounts reclassified from AOCI (a)	—		7		(1)		—		6
Net other comprehensive income (loss)	(15)		9		(2)		1		(7)
Balance as of March 31, 2022	$	(2,922)	$	(338)	$	(128)	$	1	$	(3,387)

(in millions)	CTA		Pension and OPEB plans		Hedging activities		Total
Gains (losses)
Balance as of December 31, 2020	$	(2,587)	$	(574)	$	(153)	$	(3,314)
Other comprehensive income (loss) before reclassifications	(208)		13		3		(192)
Amounts reclassified from AOCI (a)	—		17		9		26
Net other comprehensive income (loss)	(208)		30		12		(166)
Balance as of March 31, 2021	$	(2,795)	$	(544)	$	(141)	$	(3,480)

(a)    See table below for details about these reclassifications.

The following is a summary of the amounts reclassified from AOCI to net income during the three months ended March 31, 2022 and 2021.

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021		Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits	$	(9)	$	(21)	Other (income) expense, net
Less: Tax effect	2		4		Income tax expense
	$	(7)	$	(17)	Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts	$	2	$	(10)	Cost of sales
Interest rate contracts	(1)		(1)		Interest expense, net
	1		(11)		Total before tax
Less: Tax effect	—		2		Income tax expense
	$	1	$	(9)	Net of tax
Total reclassifications for the period	$	(6)	$	(26)	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.

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REVENUES

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

REVENUES

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.

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 geographic segments including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; surgical hemostat and sealant products; hospital beds and services; surgical tables, lights and pendants; and patient monitoring and diagnostic technologies. For most of those sales, 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, in all of our segments, we enter into other types of contracts including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements. 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. 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 March 31, 2022, we had $8.2 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more, which are primarily included in the Americas segment. 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 30% of this amount as revenue over the remainder of 2022, 30% in 2023, 20% in 2024, 15% in 2025 and 5% thereafter.

Significant Judgments

Revenues from product sales are recorded at the net sales price (transaction 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 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 months ended March 31, 2022 and 2021 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement.

Contract Balances

The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances and deposits (contract liabilities) on our condensed consolidated balance sheets. Net trade accounts receivable was $2.3 billion and $2.4 billion as of March 31, 2022 and December 31, 2021, respectively.

For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one to five years. For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products. In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer. In those arrangements, the contract asset becomes a trade account receivable as consumable medical products are provided and billed, generally over one to seven years.

The following table summarizes our contract assets:

(in millions)	March 31, 2022		December 31, 2021
Contract manufacturing services	$	47	$	50
Software sales	42		45
Bundled equipment and consumable medical products contracts	111		100
Contract assets	$	200	$	195

The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:

(in millions)	March 31, 2022		December 31, 2021
Prepaid expenses and other current assets	$	84	$	84
Other non-current assets	116		111
Contract assets	$	200	$	195
Accrued expenses and other current liabilities	$	166	$	162
Other non-current liabilities	74		84
Contract liabilities	$	240	$	246

Contract liabilities represent deferred revenues that arise as a result of cash received from customers or where the timing of billing for services precedes satisfaction of our performance obligations. Such remaining performance obligations represent the portion of the contract price for which work has not been performed and are primarily related to our installation and service contracts. We expect to satisfy the majority of the remaining performance obligations and recognize revenue related to installation and service contracts within the next 12 months with most of the non-current performance obligations satisfied within 24 months.

The following table summarizes contract liability activity for the three months ended March 31, 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations.

	Three Months Ended March 31, 2022
Balance at beginning of period	$	246
New revenue deferrals	116
Revenue recognized upon satisfaction of performance obligations	(122)
Balance at end of period	$	240

During the three months ended March 31, 2021, the amount of revenue recognized that was included in contract liabilities as of December 31, 2020 was not significant.

Disaggregation of Net Sales

In connection with our acquisition of Hillrom in December 2021, we have added three new product categories: Patient Support Systems, Front Line Care and Surgical Solutions.

The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:

	Three Months Ended March 31,
	2022						2021
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	225	$	669	$	894	$	216	$	706	$	922
Medication Delivery 2	472		234		706		411		241		652
Pharmaceuticals 3	157		364		521		200		352		552
Clinical Nutrition 4	84		143		227		83		151		234
Advanced Surgery 5	136		92		228		126		91		217
Acute Therapies 6	68		120		188		81		126		207
BioPharma Solutions 7	52		104		156		44		91		135
Patient Support Systems 8	295		88		383		—		—		—
Front Line Care 9	207		87		294		—		—		—
Surgical Solutions 10	37		41		78		—		—		—
Other 11	24		8		32		19		8		27
Total Baxter	$	1,757	$	1,950	$	3,707	$	1,180	$	1,766	$	2,946

1Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services.

2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products.

5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

7BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies.

8Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies.

9Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology vision screening and physical assessment.

10Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

11Other includes sales of miscellaneous product and service offerings.

Lease Revenue

We lease smart beds, such as bariatric, critical care, maternal, and home care beds, as well as other surfaces, to customers during periods of peak demand or for specialty purposes. We also lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, IV fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices.

The components of lease revenue for the three months ended March 31, 2022 and 2021 were:

(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021
Sales-type lease revenue	$	3	$	6
Operating lease revenue	122		34
Variable lease revenue	20		17
Total lease revenue	$	145	$	57

Our net investment in sales-type leases was $109 million as of March 31, 2022, of which $38 million originated in 2018 and prior, $16 million in 2019, $28 million in 2020, $25 million in 2021, and $2 million in 2022.

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BUSINESS OPTIMIZATION CHARGES

3 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

BUSINESS OPTIMIZATION CHARGES

BUSINESS OPTIMIZATION CHARGES

In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. In the current period, restructuring charges include actions taken in connection with our integration of Hillrom. From the commencement of our business optimization activities in the second half of 2015 through March 31, 2022, we have incurred cumulative pre-tax costs of $1.3 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax costs of approximately $25 million through the completion of the initiatives that are currently underway, primarily related to implementation costs. We continue to pursue cost savings initiatives and, to the extent further cost savings opportunities are identified, we may incur additional restructuring charges and costs to implement business optimization programs in future periods.

During the three months ended March 31, 2022 and 2021, we recorded the following charges related to business optimization programs.

	Three Months Ended March 31,
(in millions)	2022		2021
Restructuring charges	$	67	$	25
Costs to implement business optimization programs	14		2
Total business optimization charges	$	81	$	27

For segment reporting purposes, business optimization charges are unallocated expenses.

Costs to implement business optimization programs for the three months ended March 31, 2022 and 2021, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. These costs were primarily included within cost of sales and SG&A expense.

During the three months ended March 31, 2022 and 2021, we recorded the following restructuring charges.

	Three months ended March 31, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	2	$	47	$	—	$	49
Contract termination and other costs	—		12		—		12
Asset impairments	—		6		—		6
Total restructuring charges	$	2	$	65	$	—	$	67

	Three months ended March 31, 2021
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	16	$	5	$	—	$	21
Asset impairments	4		—		—		4
Total restructuring charges	$	20	$	5	$	—	$	25

The following table summarizes activity in the liability related to our restructuring initiatives.

(in millions)
Liability balance as of December 31, 2021	$	109
Charges	61
Payments	(31)
Currency translation	(2)
Liability balance as of March 31, 2022	$	137

Substantially all of our restructuring liabilities as of March 31, 2022 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2023.

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PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMSThe following is a summary of net periodic benefit cost relating to our pension and OPEB plans.

	Three months ended March 31,
(in millions)	2022		2021
Pension benefits
Service cost	$	19	$	22
Interest cost	24		18
Expected return on plan assets	(39)		(36)
Amortization of net losses and prior service costs	12		23
Net periodic pension cost	$	16	$	27
OPEB
Interest cost	$	1	$	1
Amortization of net loss and prior service credit	(3)		(2)
Net periodic OPEB cost (income)	$	(2)	$	(1)

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INCOME TAXES

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Our effective income tax rate was 22.3% and 14.5% for the three months ended March 31, 2022 and 2021, respectively. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, increases or decreases in valuation allowances and liabilities for uncertain tax positions and excess tax benefits on stock compensation awards.

For the three months ended March 31, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to discrete tax matters in various foreign jurisdictions, of which none are individually material, and an increase in our liabilities for uncertain tax positions, partially offset by excess tax benefits on stock compensation awards and a favorable geographic earnings mix.

For the three months ended March 31, 2021, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to decreases in accrued withholding taxes in several foreign jurisdictions and a favorable geographic earnings mix.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHAREThe numerator for both basic and diluted earnings per share (EPS) is net income attributable to Baxter stockholders. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method.

The following table is a reconciliation of basic shares to diluted shares.

	Three months ended March 31,
(in millions)	2022	2021
Basic shares	503	505
Effect of dilutive securities	6	6
Diluted shares	509	511

The effect of dilutive securities includes unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs. The computation of diluted EPS excludes 4 million and 7 million equity awards for the three months ended March 31, 2022 and 2021, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 7 for additional information regarding items impacting basic and diluted shares.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We operate on a global basis and are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs.

We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Chinese Renminbi, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Colombian Peso, Brazilian Real, Mexican Peso, Turkish Lira, Indian Rupee and Swedish Krona. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative instruments to further reduce the net exposure to foreign exchange risk. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from changes in foreign exchange rates. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures.

We are also exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in interest rates. Our policy is to manage interest costs using the mix of fixed- and floating-rate debt that we believe is appropriate at that time. To manage this mix in a cost-efficient manner, we periodically enter into interest rate swaps in which we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount.

We do not hold any instruments for trading purposes and none of our outstanding derivative instruments contain credit-risk-related contingent features.

All derivative instruments are generally recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value, or net investment hedges.

Cash Flow Hedges

We may use options, including collars and purchased options, forwards and cross-currency swaps to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities. We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt.

For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in AOCI and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted intra-company sales denominated in foreign currencies and forecasted interest payments on anticipated issuances of debt, respectively.

The notional amounts of foreign exchange contracts designated as cash flow hedges were $402 million and $377 million as of March 31, 2022 and December 31, 2021, respectively. The maximum term over which we have cash flow

hedge contracts in place related to forecasted transactions at March 31, 2022 is 12 months for foreign exchange contracts. There were no outstanding interest rate contracts designated as cash flow hedges as of March 31, 2022 and December 31, 2021.

Fair Value Hedges

We periodically use interest rate swaps to convert a portion of our fixed-rate debt into variable-rate debt. These instruments hedge our earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Changes in the fair value of hedge instruments designated as fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt.

There were no outstanding interest rate contracts designated as fair value hedges as of March 31, 2022 and December 31, 2021.

Net Investment Hedges

In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of senior notes due May 2029. We have designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI. As of March 31, 2022, we had an accumulated pre-tax unrealized translation loss in AOCI of $4 million related to the Euro-denominated senior notes.

Dedesignations

If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings.

There were no hedge dedesignations in the first three months of 2022 or 2021 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur.

If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. There were no fair value hedges terminated during the first three months of 2022 or 2021.

If we remove a net investment hedge designation, any gains or losses recognized in AOCI are not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. There were no net investment hedges terminated during the first three months of 2022 or 2021.

Undesignated Derivative Instruments

We use forward contracts to hedge earnings from the effects of foreign exchange relating to certain of our intra-company and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month.

The total notional amount of undesignated derivative instruments was $940 million as of March 31, 2022 and $851 million as of December 31, 2021.

Gains and Losses on Hedging Instruments and Undesignated Derivative Instruments

The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended March 31, 2022 and

2021.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2022		2021			2022		2021
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(1)	$	(1)
Foreign exchange contracts	(3)		4		Cost of sales	2		(10)
Net investment hedges	42		114		Other (income) expense, net	—		—
Total	$	39	$	118		$	1	$	(11)

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2022		2021
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	3	$	(22)

As of March 31, 2022, $5 million of deferred, net after-tax losses on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings.

Derivative Assets and Liabilities

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2022.

	Derivatives in asset positions			Derivatives in liability positions
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value
Derivative instruments designated as hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	12	Accrued expenses and other current liabilities	$	2
Total derivative instruments designated as hedges		12			2
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	4		Accrued expenses and other current liabilities	5
Total derivative instruments		$	16		$	7

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2021.

	Derivatives in asset positions			Derivatives in liability positions
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value
Derivative instruments designated as hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	6	Accrued expenses and other current liabilities	$	3
Total derivative instruments designated as hedges		6			3
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	2		Accrued expenses and other current liabilities	2
Total derivative instruments		$	8		$	5

While some of our derivatives are subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets. Additionally, we are not required to post collateral for any of our outstanding derivatives.

The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.

	March 31, 2022				December 31, 2021
(in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheets	$	16	$	7	$	8	$	5
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(3)		(3)		(2)		(2)
Total	$	13	$	4	$	6	$	3

The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges:

	Carrying amount of hedged item				Cumulative amount of fair value hedging adjustment included  in the carrying amount of the hedged item (a)
(in millions)	Balance as of March 31, 2022		Balance as of December 31, 2021		Balance as of March 31, 2022		Balance as of December 31, 2021
Long-term debt	$	101	$	101	$	4	$	4

(a) These fair value hedges were terminated in 2018 and earlier periods.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTSThe following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.

			Basis of fair value measurement
(in millions)	Balance as of March 31, 2022		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	16	$	—	$	16	$	—
Debt securities	53		—		—		53
Marketable equity securities	8		8		—		—
Total	$	77	$	8	$	16	$	53
Liabilities
Foreign exchange contracts	$	7	$	—	$	7	$	—
Contingent payments related to acquisitions	124		—		—		124
Total	$	131	$	—	$	7	$	124

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2021		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	8	$	—	$	8	$	—
Debt securities	30		—		—		30
Marketable equity securities	10		10		—		—
Total	$	48	$	10	$	8	$	30
Liabilities
Foreign exchange contracts	$	5	$	—	$	5	$	—
Contingent payments related to acquisitions	143		—		—		143
Total	$	148	$	—	$	5	$	143

As of March 31, 2022 and December 31, 2021, cash and cash equivalents of $2.3 billion and $3.0 billion, respectively, included money market and other short-term funds of approximately $426 million and $816 million, respectively, which are considered Level 2 in the fair value hierarchy.

For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility.

Debt securities, which consist of convertible debt and convertible redeemable preferred shares issued by nonpublic entities, are measured using discounted cash flow and option pricing models. Those debt securities are classified as Level 3 fair value measurements when there are no observable transactions near the balance sheet date due to the lack of observable data over certain fair value inputs such as equity volatility. The fair values of debt securities increase when interest rates decrease, equity volatility increases, or the fair values of the equity shares underlying the conversion options increase.

Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated.

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and debt securities.

	Three months ended March 31,
	2022				2021
(in millions)	Contingent payments related to acquisitions		Debt securities		Contingent payments related to acquisitions
Fair value at beginning of period	$	143	$	30	$	30
Additions	—		21		24
Change in fair value recognized in earnings	(17)		—		—
Change in fair value recognized in AOCI	—		2		—
Payments	(2)		—		(16)
Fair value at end of period	$	124	$	53	$	38

Financial Instruments Not Measured at Fair Value

In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of March 31, 2022 and December 31, 2021.

	Book values				Fair values(a)
(in millions)	2022		2021		2022		2021
Liabilities
Short-term debt	$	200	$	301	$	200	$	301
Current maturities of long-term debt and finance lease obligations	209		210		209		212
Long-term debt and finance lease obligations	16,765		17,149		16,221		17,568

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments, such as accounts receivable and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities.

Equity investments not measured at fair value are comprised of other equity investments without readily determinable fair values and were $110 million at March 31, 2022 and $114 million at December 31, 2021. Those investments are included in Other non-current assets on our condensed consolidated balance sheets.

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SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

We manage our business based on four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a new global segment for the acquired Hillrom business. The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space.

We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation.

Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, certain product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments). For the period from our acquisition of Hillrom on December 13, 2021 through December 31, 2021, we previously included all costs incurred by the Hillrom business within that segment, including the types of costs described in the preceding sentence that are maintained at Corporate for our legacy Baxter segments. In connection with our ongoing integration activities, beginning in the first quarter 2022, we have updated the measure of profitability for our Hillrom segment by excluding such unallocated costs, consistent with our legacy Baxter segments. Those unallocated costs related to Hillrom, which totaled $219 million for the three months ended March 31, 2022, are now presented within Corporate as well.

Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment.

Financial information for our segments is as follows.

	Three months ended March 31,
(in millions)	2022		2021
Net sales:
Americas	$	1,626	$	1,560
EMEA	699		738
APAC	627		648
Hillrom	755		—
Total net sales	$	3,707	$	2,946
Operating income:
Americas	$	610	$	599
EMEA	119		135
APAC	151		138
Hillrom	200		—
Total segment operating income	$	1,080	$	872

The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income.

	Three months ended March 31,
(in millions)	2022		2021
Total segment operating income	$	1,080	$	872
Corporate and other	(917)		(482)
Total operating income	163		390
Interest expense, net	85		34
Other (income) expense, net	(16)		5
Income before income taxes	$	94	$	351

Refer to Note 9 for additional information on Net Sales by product category.

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote 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, 2021 (2021 Annual Report).In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation 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.

Risks and Uncertainties Related to COVID-19 and Global Economic Conditions

Risks and Uncertainties Related to COVID-19 and Global Economic Conditions Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments have taken and continue to take. Initial measures taken in 2020 led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities, including a shift in healthcare priorities, which resulted in a significant decline in medical procedures in 2020. The pandemic has created significant volatility in the demand for our products. For further information about our revenues by product category, refer to Note 9. Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic. For example, concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron variants, subvariants and other virus mutations as well as vaccine distribution and hesitancy. The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to mandatory vaccinations for certain of our employees, moratoriums on elective procedures and mandatory quarantines and travel restrictions). Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility. We have experienced significant challenges, including lengthy delays, shortages and interruptions, posed by the pandemic and other exogenous factors (including significant weather events, disruptions to certain ports of call around the world and certain geopolitical events) to our global supply chain, including the cost and availability of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, and may experience these and other challenges in future periods. Many of our manufacturing plant and distribution center personnel are currently unvaccinated, and we may also experience employee resistance in complying with current and future government vaccine and testing mandates, which may cause labor shortages significantly impacting manufacturing production and distribution center productivity. We expect that these challenges as well as evolving governmental restrictions and requirements, among other factors, may continue to have an adverse effect on our business.

New Accounting Standards

New Accounting Standards

Recently adopted accounting pronouncements

As of January 1, 2022, we adopted Accounting Standards Update (ASU) 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement. These changes are intended to avoid recognizing a day-one loss for a lease with variable payments even though the lessor expects the arrangement will be profitable overall. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements.

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ACQUISITIONS AND OTHER ARRANGEMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Business Acquisitions, by Acquisition

The following table summarizes the fair value of the total consideration paid:

(in millions)
Cash consideration paid to Hillrom shareholders(a)	$	10,474
Fair value of equity awards issued to Hillrom equity award holders(b)	2
Total Consideration	$	10,476

(a) Represents cash consideration transferred of $156.00 per outstanding Hillrom common share to existing shareholders and holders of equity awards that vested at closing pursuant to their original terms.

(b) Represents the pre-acquisition service portion of the fair value of 668 thousand replacement restricted stock units issued to Hillrom equity award holders at closing.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:

(in millions)
Assets acquired and liabilities assumed
Cash and cash equivalents	$	399
Accounts receivable	590
Inventories	557
Prepaid expenses and other current assets	49
Property, plant and equipment	502
Goodwill	6,795
Other intangible assets	6,029
Operating lease right-of-use assets	74
Other non-current assets	125
Short-term debt	(250)
Accounts payable	(140)
Accrued expenses and other current liabilities	(552)
Long-term debt and finance lease obligations	(2,118)
Operating lease liabilities	(57)
Other non-current liabilities	(1,527)
Total assets acquired and liabilities assumed	$	10,476

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SUPPLEMENTAL FINANCIAL INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The following table is a summary of the changes in our allowance for doubtful accounts for the three months ended March 31, 2022 and 2021.

	Three months ended March 31,
(in millions)	2022		2021
Balance at beginning of period	$	122	$	125
Charged to costs and expenses	6		1
Write-offs	(1)		—
Currency translation adjustments	2		(6)
Balance at end of period	$	129	$	120

Inventories

Inventories

(in millions)	March 31, 2022		December 31, 2021
Raw materials	$	656	$	591
Work in process	285		300
Finished goods	1,607		1,562
Inventories	$	2,548	$	2,453

Property, Plant and Equipment, Net

Property, Plant and Equipment, Net

(in millions)	March 31, 2022		December 31, 2021
Property, plant and equipment, at cost	$	11,757	$	11,728
Accumulated depreciation	(6,643)		(6,550)
Property, plant and equipment, net	$	5,114	$	5,178

Interest Expense, Net

Interest Expense, Net

	Three months ended March 31,
(in millions)	2022		2021
Interest expense, net of capitalized interest	$	88	$	37
Interest income	(3)		(3)
Interest expense, net	$	85	$	34

Other (Income) Expense, Net

Other (Income) Expense, Net

	Three months ended March 31,
(in millions)	2022		2021
Foreign exchange (gains) losses, net	$	(11)	$	(3)
Pension and other postretirement benefit plans	(5)		4
Other, net	—		4
Other (income) expense, net	$	(16)	$	5

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GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following is a reconciliation of goodwill by business segment.

(in millions)	Americas		EMEA		APAC		Hillrom		Total
Balance as of December 31, 2021	$	2,517	$	309	$	224	$	6,786	$	9,836
Acquisition accounting adjustments	—		—		—		10		10
Currency translation	(29)		(3)		(3)		5		(30)
Balance as of March 31, 2022	$	2,488	$	306	$	221	$	6,801	$	9,816

Other Intangible Assets, Net

The following is a summary of our other intangible assets.

(in millions)	Customer relationships		Developed technology, including patents		Other amortized intangible assets		Indefinite-lived intangible assets		Total
March 31, 2022
Gross other intangible assets	$	3,457	$	3,883	$	340	$	2,140	$	9,820
Accumulated amortization	(262)		(1,638)		(227)		—		(2,127)
Other intangible assets, net	$	3,195	$	2,245	$	113	$	2,140	$	7,693
December 31, 2021
Gross other intangible assets	$	3,437	$	3,801	$	344	$	2,140	$	9,722
Accumulated amortization	(162)		(1,556)		(212)		—		(1,930)
Other intangible assets, net	$	3,275	$	2,245	$	132	$	2,140	$	7,792

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STOCKHOLDERS’ EQUITY (Tables)

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The weighted-average Black-Scholes assumptions used in establishing the fair value of stock options granted during the period, along with weighted-average grant date fair values, were as follows:

	Three months ended March 31,
	2022			2021
Expected volatility	24		%	25		%
Expected life (in years)	5.5			5.5
Risk-free interest rate	1.8		%	0.8		%
Dividend yield	1.3		%	1.3		%
Fair value per stock option	$	18		$	16

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Summary of Changes in AOCI by Component

The following table is a net-of-tax summary of the changes in accumulated other comprehensive (loss) income (AOCI) by component for the three months ended March 31, 2022 and 2021.

(in millions)	CTA		Pension and OPEB plans		Hedging activities		Debt securities		Total
Gains (losses)
Balance as of December 31, 2021	$	(2,907)	$	(347)	$	(126)	$	—	$	(3,380)
Other comprehensive income (loss) before reclassifications	(15)		2		(1)		1		(13)
Amounts reclassified from AOCI (a)	—		7		(1)		—		6
Net other comprehensive income (loss)	(15)		9		(2)		1		(7)
Balance as of March 31, 2022	$	(2,922)	$	(338)	$	(128)	$	1	$	(3,387)

(in millions)	CTA		Pension and OPEB plans		Hedging activities		Total
Gains (losses)
Balance as of December 31, 2020	$	(2,587)	$	(574)	$	(153)	$	(3,314)
Other comprehensive income (loss) before reclassifications	(208)		13		3		(192)
Amounts reclassified from AOCI (a)	—		17		9		26
Net other comprehensive income (loss)	(208)		30		12		(166)
Balance as of March 31, 2021	$	(2,795)	$	(544)	$	(141)	$	(3,480)

(a)    See table below for details about these reclassifications.

Summary of Reclassification from AOCI to Net Income

The following is a summary of the amounts reclassified from AOCI to net income during the three months ended March 31, 2022 and 2021.

	Amounts reclassified from AOCI (a)
(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021		Location of impact in income statement
Pension and OPEB items
Amortization of net losses and prior service costs or credits	$	(9)	$	(21)	Other (income) expense, net
Less: Tax effect	2		4		Income tax expense
	$	(7)	$	(17)	Net of tax
Gains (losses) on hedging activities
Foreign exchange contracts	$	2	$	(10)	Cost of sales
Interest rate contracts	(1)		(1)		Interest expense, net
	1		(11)		Total before tax
Less: Tax effect	—		2		Income tax expense
	$	1	$	(9)	Net of tax
Total reclassifications for the period	$	(6)	$	(26)	Total net of tax

(a)    Amounts in parentheses indicate reductions to net income

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REVENUES (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Contract with Customer, Contract Asset

The following table summarizes our contract assets:

(in millions)	March 31, 2022		December 31, 2021
Contract manufacturing services	$	47	$	50
Software sales	42		45
Bundled equipment and consumable medical products contracts	111		100
Contract assets	$	200	$	195

The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:

(in millions)	March 31, 2022		December 31, 2021
Prepaid expenses and other current assets	$	84	$	84
Other non-current assets	116		111
Contract assets	$	200	$	195
Accrued expenses and other current liabilities	$	166	$	162
Other non-current liabilities	74		84
Contract liabilities	$	240	$	246

The following table summarizes contract liability activity for the three months ended March 31, 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations.

	Three Months Ended March 31, 2022
Balance at beginning of period	$	246
New revenue deferrals	116
Revenue recognized upon satisfaction of performance obligations	(122)
Balance at end of period	$	240

Net Sales from Contracts with Customers by Global Business Unit

The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:

	Three Months Ended March 31,
	2022						2021
(in millions)	U.S.		International		Total		U.S.		International		Total
Renal Care 1	$	225	$	669	$	894	$	216	$	706	$	922
Medication Delivery 2	472		234		706		411		241		652
Pharmaceuticals 3	157		364		521		200		352		552
Clinical Nutrition 4	84		143		227		83		151		234
Advanced Surgery 5	136		92		228		126		91		217
Acute Therapies 6	68		120		188		81		126		207
BioPharma Solutions 7	52		104		156		44		91		135
Patient Support Systems 8	295		88		383		—		—		—
Front Line Care 9	207		87		294		—		—		—
Surgical Solutions 10	37		41		78		—		—		—
Other 11	24		8		32		19		8		27
Total Baxter	$	1,757	$	1,950	$	3,707	$	1,180	$	1,766	$	2,946

1Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services.

2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.

3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.

4Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products.

5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.

6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).

7BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies.

8Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies.

9Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology vision screening and physical assessment.

10Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories.

11Other includes sales of miscellaneous product and service offerings.

Sales-type Lease, Lease Income

The components of lease revenue for the three months ended March 31, 2022 and 2021 were:

(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021
Sales-type lease revenue	$	3	$	6
Operating lease revenue	122		34
Variable lease revenue	20		17
Total lease revenue	$	145	$	57

Operating Lease, Lease Income

The components of lease revenue for the three months ended March 31, 2022 and 2021 were:

(in millions)	Three months ended March 31, 2022		Three months ended March 31, 2021
Sales-type lease revenue	$	3	$	6
Operating lease revenue	122		34
Variable lease revenue	20		17
Total lease revenue	$	145	$	57

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BUSINESS OPTIMIZATION CHARGES (Tables)

3 Months Ended

Mar. 31, 2022

Restructuring and Related Activities [Abstract]

Summary of Business Optimization Charges

During the three months ended March 31, 2022 and 2021, we recorded the following charges related to business optimization programs.

	Three Months Ended March 31,
(in millions)	2022		2021
Restructuring charges	$	67	$	25
Costs to implement business optimization programs	14		2
Total business optimization charges	$	81	$	27

Components of Restructuring Charges

During the three months ended March 31, 2022 and 2021, we recorded the following restructuring charges.

	Three months ended March 31, 2022
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	2	$	47	$	—	$	49
Contract termination and other costs	—		12		—		12
Asset impairments	—		6		—		6
Total restructuring charges	$	2	$	65	$	—	$	67

	Three months ended March 31, 2021
(in millions)	COGS		SG&A		R&D		Total
Employee termination costs	$	16	$	5	$	—	$	21
Asset impairments	4		—		—		4
Total restructuring charges	$	20	$	5	$	—	$	25

Summary of Activity in Reserves Related to Restructuring Initiatives

The following table summarizes activity in the liability related to our restructuring initiatives.

(in millions)
Liability balance as of December 31, 2021	$	109
Charges	61
Payments	(31)
Currency translation	(2)
Liability balance as of March 31, 2022	$	137

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PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS (Tables)

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans

The following is a summary of net periodic benefit cost relating to our pension and OPEB plans.

	Three months ended March 31,
(in millions)	2022		2021
Pension benefits
Service cost	$	19	$	22
Interest cost	24		18
Expected return on plan assets	(39)		(36)
Amortization of net losses and prior service costs	12		23
Net periodic pension cost	$	16	$	27
OPEB
Interest cost	$	1	$	1
Amortization of net loss and prior service credit	(3)		(2)
Net periodic OPEB cost (income)	$	(2)	$	(1)

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Reconciliation of Basic Shares to Diluted Shares

The following table is a reconciliation of basic shares to diluted shares.

	Three months ended March 31,
(in millions)	2022	2021
Basic shares	503	505
Effect of dilutive securities	6	6
Diluted shares	509	511

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Gains and Losses on Derivative Instruments

The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended March 31, 2022 and

2021.

	Gain (loss) recognized in OCI				Location of gain (loss) in income statement	Gain (loss) reclassified from AOCI into income
(in millions)	2022		2021			2022		2021
Cash flow hedges
Interest rate contracts	$	—	$	—	Interest expense, net	$	(1)	$	(1)
Foreign exchange contracts	(3)		4		Cost of sales	2		(10)
Net investment hedges	42		114		Other (income) expense, net	—		—
Total	$	39	$	118		$	1	$	(11)

	Location of gain (loss) in income statement	Gain (loss) recognized in income
(in millions)		2022		2021
Undesignated derivative instruments
Foreign exchange contracts	Other (income) expense, net	$	3	$	(22)

Classification and Fair Values of Derivative Instruments

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of March 31, 2022.

	Derivatives in asset positions			Derivatives in liability positions
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value
Derivative instruments designated as hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	12	Accrued expenses and other current liabilities	$	2
Total derivative instruments designated as hedges		12			2
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	4		Accrued expenses and other current liabilities	5
Total derivative instruments		$	16		$	7

The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2021.

	Derivatives in asset positions			Derivatives in liability positions
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value
Derivative instruments designated as hedges
Foreign exchange contracts	Prepaid expenses and other current assets	$	6	Accrued expenses and other current liabilities	$	3
Total derivative instruments designated as hedges		6			3
Undesignated derivative instruments
Foreign exchange contracts	Prepaid expenses and other current assets	2		Accrued expenses and other current liabilities	2
Total derivative instruments		$	8		$	5

Derivative Positions Presented On Net Basis

The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty.

	March 31, 2022				December 31, 2021
(in millions)	Asset		Liability		Asset		Liability
Gross amounts recognized in the condensed consolidated balance sheets	$	16	$	7	$	8	$	5
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(3)		(3)		(2)		(2)
Total	$	13	$	4	$	6	$	3

Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges

The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges:

	Carrying amount of hedged item				Cumulative amount of fair value hedging adjustment included  in the carrying amount of the hedged item (a)
(in millions)	Balance as of March 31, 2022		Balance as of December 31, 2021		Balance as of March 31, 2022		Balance as of December 31, 2021
Long-term debt	$	101	$	101	$	4	$	4

(a) These fair value hedges were terminated in 2018 and earlier periods.

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Summary of Financial Instruments Measured at Fair Value on Recurring Basis

The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.

			Basis of fair value measurement
(in millions)	Balance as of March 31, 2022		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	16	$	—	$	16	$	—
Debt securities	53		—		—		53
Marketable equity securities	8		8		—		—
Total	$	77	$	8	$	16	$	53
Liabilities
Foreign exchange contracts	$	7	$	—	$	7	$	—
Contingent payments related to acquisitions	124		—		—		124
Total	$	131	$	—	$	7	$	124

			Basis of fair value measurement
(in millions)	Balance as of December 31, 2021		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	$	8	$	—	$	8	$	—
Debt securities	30		—		—		30
Marketable equity securities	10		10		—		—
Total	$	48	$	10	$	8	$	30
Liabilities
Foreign exchange contracts	$	5	$	—	$	5	$	—
Contingent payments related to acquisitions	143		—		—		143
Total	$	148	$	—	$	5	$	143

Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs

The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and debt securities.

	Three months ended March 31,
	2022				2021
(in millions)	Contingent payments related to acquisitions		Debt securities		Contingent payments related to acquisitions
Fair value at beginning of period	$	143	$	30	$	30
Additions	—		21		24
Change in fair value recognized in earnings	(17)		—		—
Change in fair value recognized in AOCI	—		2		—
Payments	(2)		—		(16)
Fair value at end of period	$	124	$	53	$	38

Book Values and Fair Values of Financial Instruments

the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of March 31, 2022 and December 31, 2021.

	Book values				Fair values(a)
(in millions)	2022		2021		2022		2021
Liabilities
Short-term debt	$	200	$	301	$	200	$	301
Current maturities of long-term debt and finance lease obligations	209		210		209		212
Long-term debt and finance lease obligations	16,765		17,149		16,221		17,568

(a)    These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs.

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SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Summary of Financial Information for Our Segments

Financial information for our segments is as follows.

	Three months ended March 31,
(in millions)	2022		2021
Net sales:
Americas	$	1,626	$	1,560
EMEA	699		738
APAC	627		648
Hillrom	755		—
Total net sales	$	3,707	$	2,946
Operating income:
Americas	$	610	$	599
EMEA	119		135
APAC	151		138
Hillrom	200		—
Total segment operating income	$	1,080	$	872

Operating Income to Income Before Income Taxes Reconciliation

The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income.

	Three months ended March 31,
(in millions)	2022		2021
Total segment operating income	$	1,080	$	872
Corporate and other	(917)		(482)
Total operating income	163		390
Interest expense, net	85		34
Other (income) expense, net	(16)		5
Income before income taxes	$	94	$	351

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ACQUISITIONS AND OTHER ARRANGEMENTS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
	Dec. 13, 2021	Mar. 31, 2022
Business Acquisition [Line Items]
Acquisition accounting adjustments		$ 10
Hillrom
Business Acquisition [Line Items]
Cash consideration	$ 10,500
Enterprise value	$ 12,800
Cash consideration transferred (in usd per share)	$ 156.00
Other intangible assets		7
Deferred income taxes		11
Adjustment, assets acquired and liabilities assumed		6
Acquisition accounting adjustments		10
Incremental costs of sales		$ 159

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ACQUISITIONS AND OTHER ARRANGEMENTS - Schedule of Total Consideration for Hillrom (Details) - Hillrom $ / shares in Units, shares in Thousands, $ in Millions	Dec. 13, 2021 USD ($) $ / shares shares
Acquisitions And Collaborations [Line Items]
Cash consideration paid to Hillrom shareholders	$ 10,474
Fair value of equity awards issued to Hillrom equity award holders	2
Total Consideration	$ 10,476
Cash consideration transferred (in usd per share) | $ / shares	$ 156.00
Business acquisition, equity interest issued or issuable (in shares) | shares	668

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ACQUISITIONS AND OTHER ARRANGEMENTS - Summary of Fair Value of Assets Acquired and Liabilities Assumed for Hillrom (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021	Dec. 13, 2021
Acquisitions And Collaborations [Line Items]
Goodwill	$ 9,816	$ 9,836
Hillrom
Acquisitions And Collaborations [Line Items]
Cash and cash equivalents			$ 399
Accounts receivable			590
Inventories			557
Prepaid expenses and other current assets			49
Property, plant and equipment			502
Goodwill			6,795
Other intangible assets			6,029
Operating lease right-of-use assets			74
Other non-current assets			125
Short-term debt			(250)
Accounts payable			(140)
Accrued expenses and other current liabilities			(552)
Long-term debt and finance lease obligations			(2,118)
Operating lease liabilities			(57)
Other non-current liabilities			(1,527)
Total assets acquired and liabilities assumed			$ 10,476

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ACQUISITIONS AND OTHER ARRANGEMENTS - Other Business Development Activities (Details) - Zosyn $ in Millions	1 Months Ended
	Mar. 31, 2022 USD ($)
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross	$ 122
Developed Technology Intangible Asset
Business Acquisition [Line Items]
Weighted-average useful life	9 years

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SUPPLEMENTAL FINANCIAL INFORMATION - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	$ 122	$ 125
Charged to costs and expenses	6	1
Write-offs	(1)	0
Currency translation adjustments	2	(6)
Balance at end of period	$ 129	$ 120

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SUPPLEMENTAL FINANCIAL INFORMATION - Inventories (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 656	$ 591
Work in process	285	300
Finished goods	1,607	1,562
Inventories	$ 2,548	$ 2,453

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SUPPLEMENTAL FINANCIAL INFORMATION - Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Property, plant and equipment, at cost	$ 11,757	$ 11,728
Accumulated depreciation	(6,643)	(6,550)
Property, plant and equipment, net	$ 5,114	$ 5,178

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SUPPLEMENTAL FINANCIAL INFORMATION - Interest Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Interest Income Expense Net
Interest expense, net of capitalized interest	$ 88	$ 37
Interest income	(3)	(3)
Interest expense, net	$ 85	$ 34

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SUPPLEMENTAL FINANCIAL INFORMATION - Other Expense, Net (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Other Income, net
Foreign exchange (gains) losses, net	$ (11)	$ (3)
Pension and other postretirement benefit plans	(5)	4
Other, net	0	4
Other (income) expense, net	$ 16	$ (5)

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SUPPLEMENTAL FINANCIAL INFORMATION - Additional Information (Details) - USD ($) shares in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Property, Plant and Equipment [Line Items]
Right-of-use asset obtained in exchange for operating lease liability	$ 14,000,000	$ 5,000,000
Unsettled share repurchases (in shares)	3.6
Unsettled share repurchases, value (in usd)		300,000,000
Other Liabilities Current, Unsettled Share Repurchase	$ 0	47,000,000
Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Capital expenditures incurred but not yet paid	$ 53,000,000	$ 63,000,000

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GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Goodwill (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 9,836
Acquisition accounting adjustments	10
Currency translation	(30)
Goodwill, ending balance	9,816
Americas
Goodwill [Roll Forward]
Goodwill, beginning balance	2,517
Acquisition accounting adjustments	0
Currency translation	(29)
Goodwill, ending balance	2,488
EMEA
Goodwill [Roll Forward]
Goodwill, beginning balance	309
Acquisition accounting adjustments	0
Currency translation	(3)
Goodwill, ending balance	306
APAC
Goodwill [Roll Forward]
Goodwill, beginning balance	224
Acquisition accounting adjustments	0
Currency translation	(3)
Goodwill, ending balance	221
Hillrom
Goodwill [Roll Forward]
Goodwill, beginning balance	6,786
Acquisition accounting adjustments	10
Currency translation	5
Goodwill, ending balance	$ 6,801

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GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, impairment loss	$ 0
Intangible asset amortization expense	$ 217,000,000	$ 64,000,000

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GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Other Intangible Assets, Net (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Intangible Asset Excluding Goodwill [Line Items]
Accumulated amortization	$ (2,127)	$ (1,930)
Gross other intangible assets	9,820	9,722
Other intangible assets, net	7,693	7,792
Indefinite-lived intangible assets
Intangible Asset Excluding Goodwill [Line Items]
Other intangible assets	2,140	2,140
Accumulated amortization	0	0
Customer relationships
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets	3,457	3,437
Accumulated amortization	(262)	(162)
Other intangible assets, net	3,195	3,275
Developed technology, including patents
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets	3,883	3,801
Accumulated amortization	(1,638)	(1,556)
Other intangible assets, net	2,245	2,245
Other amortized intangible assets
Intangible Asset Excluding Goodwill [Line Items]
Gross other intangible assets	340	344
Accumulated amortization	(227)	(212)
Other intangible assets, net	$ 113	$ 132

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FINANCING ARRANGEMENTS (Details) € in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Mar. 31, 2022 EUR (€)
Debt Instrument [Line Items]
Commercial paper, average outstanding	$ 200,000,000	$ 300,000,000
Weighted-average interest rate	0.50%	0.27%	0.50%
Original weighted-average term	89 days	88 days
Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, current borrowing capacity	$ 2,500,000,000		€ 200
Borrowings outstanding	0	$ 0
Senior Three Year Term Loan | Senior Notes
Debt Instrument [Line Items]
Repaid debt	170,000,000
Senior notes	$ 2,000,000,000
Weighted-average term	3 years		3 years
Senior Five Year Term Loan | Senior Notes
Debt Instrument [Line Items]
Repaid debt	$ 175,000,000
Senior notes	$ 2,000,000,000
Weighted-average term	5 years		5 years

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COMMITMENTS AND CONTINGENCIES (Details) $ in Millions			3 Months Ended
	Feb. 18, 2022 USD ($)	Jan. 12, 2021 USD ($)	Mar. 31, 2022 USD ($) site	Dec. 31, 2021 USD ($)	Mar. 31, 2020 lawsuit
Loss Contingencies [Line Items]
Litigation reserve			$ 57	$ 72
Agreement to settle the case		$ 16
Civil settlement amount	$ 18
Number of lawsuits | lawsuit					2
Superfund Sites | Environmental Clean-up
Loss Contingencies [Line Items]
Number of sites | site			6
Environmental reserves			$ 18	$ 18

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STOCKHOLDERS' EQUITY - Stock Options Fair Value Assumptions (Details) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected volatility	24.00%	25.00%
Expected life (in years)	5 years 6 months	5 years 6 months
Risk-free interest rate	1.80%	0.80%
Dividend yield	1.30%	1.30%
Fair value per stock option (in usd per share)	$ 18	$ 16

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STOCKHOLDERS' EQUITY - Narrative (Details) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($) $ / shares shares	Mar. 31, 2021 USD ($) $ / shares	Oct. 31, 2020 USD ($)	Nov. 30, 2018 USD ($)	Feb. 28, 2018 USD ($)	Nov. 30, 2016 USD ($)	Jul. 31, 2012 USD ($)
Stockholders Equity Note [Line Items]
Stock compensation	$ 32	$ 22
Total intrinsic value of stock options exercised	$ 27	$ 21
Cash dividends declared per common share (in dollars per share) | $ / shares	$ 0.28	$ 0.245
Stock repurchase program, authorized amount							$ 2,000
Stock repurchase program, additional authorized amount			$ 1,500	$ 2,000	$ 1,500	$ 1,500
Purchases of treasury stock (in shares) | shares	3.6
Remaining value available under stock repurchase programs	$ 1,300
SG&A
Stockholders Equity Note [Line Items]
Stock compensation expense allocation percentage	0.75
Employee Stock Option
Stockholders Equity Note [Line Items]
Gross stock options (in shares) | shares	1.8
Stock granted, value, share-based compensation, gross	$ 33
Unrecognized compensation cost related to all unvested stock options	$ 80
Weighted-average period for all unvested stock options	1 year 10 months 24 days
Restricted Stock Units (RSUs)
Stockholders Equity Note [Line Items]
Grants in period (in shares) | shares	1.2
Stock granted, value, share-based compensation, gross	$ 102
Unrecognized compensation cost related to all unvested stock options	$ 163
Weighted-average period for all unvested stock options	2 years 2 months 12 days
Performance Shares
Stockholders Equity Note [Line Items]
Grants in period (in shares) | shares	0.4
Stock granted, value, share-based compensation, gross	$ 34
Unrecognized compensation cost related to all unvested stock options	$ 50
Weighted-average period for all unvested stock options	1 year 10 months 24 days

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ACCUMULATED OTHER COMPREHENSIVE INCOME - Summary of Changes in AOCI by Component (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Gains (losses)
Balance, beginning of period (in usd)	$ 9,121	$ 8,726
Other comprehensive income (loss) before reclassifications	(13)	(192)
Amounts reclassified from AOCI	6	26
Net other comprehensive income (loss)	(7)	(166)
Balance, end of period (in usd)	9,119	8,490
CTA
Gains (losses)
Balance, beginning of period (in usd)	(2,907)	(2,587)
Other comprehensive income (loss) before reclassifications	(15)	(208)
Amounts reclassified from AOCI	0	0
Net other comprehensive income (loss)	(15)	(208)
Balance, end of period (in usd)	(2,922)	(2,795)
Pension and OPEB plans
Gains (losses)
Balance, beginning of period (in usd)	(347)	(574)
Other comprehensive income (loss) before reclassifications	2	13
Amounts reclassified from AOCI	7	17
Net other comprehensive income (loss)	9	30
Balance, end of period (in usd)	(338)	(544)
Hedging activities
Gains (losses)
Balance, beginning of period (in usd)	(126)	(153)
Other comprehensive income (loss) before reclassifications	(1)	3
Amounts reclassified from AOCI	(1)	9
Net other comprehensive income (loss)	(2)	12
Balance, end of period (in usd)	(128)	(141)
Debt securities
Gains (losses)
Balance, beginning of period (in usd)	0
Other comprehensive income (loss) before reclassifications	1
Amounts reclassified from AOCI	0
Net other comprehensive income (loss)	1
Balance, end of period (in usd)	1
Total
Gains (losses)
Balance, beginning of period (in usd)	(3,380)	(3,314)
Balance, end of period (in usd)	$ (3,387)	$ (3,480)

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ACCUMULATED OTHER COMPREHENSIVE INCOME - Summary of Amounts Reclassification from AOCI to Net Income (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (income) expense, net	$ 16	$ (5)
Income tax expense	(21)	(51)
Cost of sales	(2,359)	(1,801)
Total before tax	94	351
Total net of tax	71	298
Amounts reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total net of tax	(6)	(26)
Pension and OPEB items | Amounts reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other (income) expense, net	(9)	(21)
Income tax expense	2	4
Total net of tax	(7)	(17)
Gains (losses) on hedging activities | Amounts reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense	0	2
Total before tax	1	(11)
Total net of tax	1	(9)
Gains (losses) on hedging activities | Foreign exchange contracts | Amounts reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Cost of sales	2	(10)
Gains (losses) on hedging activities | Interest rate contracts | Amounts reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense, net	$ (1)	$ (1)

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REVENUES - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenue From Contract With Customer [Line Items]
Net trade accounts receivable	$ 2,300	$ 2,400
Sales-type lease, net of investment in lease	109
Sales-type leases, receivables	$ 2	$ 25	$ 28	$ 16	$ 38
Minimum
Revenue From Contract With Customer [Line Items]
Global payment terms	30 days
Minimum | Software sales
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	1 year
Minimum | Consumable Medical Products
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	1 year
Maximum
Revenue From Contract With Customer [Line Items]
Global payment terms	90 days
Maximum | Contract manufacturing services
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	90 days
Maximum | Software sales
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	5 years
Maximum | Consumable Medical Products
Revenue From Contract With Customer [Line Items]
Revenue recognized contract period	7 years

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REVENUES - Remaining Performance Obligations (Details) $ in Billions	Mar. 31, 2022 USD ($)
Revenue From Contract With Customer [Line Items]
Transaction price allocated to remaining performance obligations	$ 8.2
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-04-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	30.00%
Remaining performance obligations period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	30.00%
Remaining performance obligations period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	20.00%
Remaining performance obligations period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	15.00%
Remaining performance obligations period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01
Revenue From Contract With Customer [Line Items]
Remaining revenue performance obligation, percentage of revenue expected to be recognized	5.00%
Remaining performance obligations period

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REVENUES - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Revenue From Contract With Customer [Line Items]
Contract assets	$ 200	$ 195
Contract liabilities	240	246
Revenue From Contract With Customer [Roll Forward]
Balance at beginning of period	246
New revenue deferrals	116
Revenue recognized upon satisfaction of performance obligations	(122)
Balance at end of period	240
Prepaid expenses and other current assets
Revenue From Contract With Customer [Line Items]
Contract assets	84	84
Other non-current assets
Revenue From Contract With Customer [Line Items]
Contract assets	116	111
Accrued expenses and other current liabilities
Revenue From Contract With Customer [Line Items]
Contract liabilities	166	162
Revenue From Contract With Customer [Roll Forward]
Balance at beginning of period	162
Balance at end of period	166
Other non-current liabilities
Revenue From Contract With Customer [Line Items]
Contract liabilities	74	84
Revenue From Contract With Customer [Roll Forward]
Balance at beginning of period	84
Balance at end of period	74
Contract manufacturing services
Revenue From Contract With Customer [Line Items]
Contract assets	47	50
Software sales
Revenue From Contract With Customer [Line Items]
Contract assets	42	45
Bundled equipment and consumable medical products contracts
Revenue From Contract With Customer [Line Items]
Contract assets	$ 111	$ 100

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REVENUES - Net Sales from Contracts with Customers by Global Business Unit (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenue From Contract With Customer [Line Items]
Net sales	$ 3,707	$ 2,946
U.S.
Revenue From Contract With Customer [Line Items]
Net sales	1,757	1,180
International
Revenue From Contract With Customer [Line Items]
Net sales	1,950	1,766
Renal Care
Revenue From Contract With Customer [Line Items]
Net sales	894	922
Renal Care | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	225	216
Renal Care | International
Revenue From Contract With Customer [Line Items]
Net sales	669	706
Medication Delivery
Revenue From Contract With Customer [Line Items]
Net sales	706	652
Medication Delivery | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	472	411
Medication Delivery | International
Revenue From Contract With Customer [Line Items]
Net sales	234	241
Pharmaceuticals
Revenue From Contract With Customer [Line Items]
Net sales	521	552
Pharmaceuticals | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	157	200
Pharmaceuticals | International
Revenue From Contract With Customer [Line Items]
Net sales	364	352
Clinical Nutrition
Revenue From Contract With Customer [Line Items]
Net sales	227	234
Clinical Nutrition | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	84	83
Clinical Nutrition | International
Revenue From Contract With Customer [Line Items]
Net sales	143	151
Advanced Surgery
Revenue From Contract With Customer [Line Items]
Net sales	228	217
Advanced Surgery | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	136	126
Advanced Surgery | International
Revenue From Contract With Customer [Line Items]
Net sales	92	91
Acute Therapies
Revenue From Contract With Customer [Line Items]
Net sales	188	207
Acute Therapies | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	68	81
Acute Therapies | International
Revenue From Contract With Customer [Line Items]
Net sales	120	126
BioPharma Solutions
Revenue From Contract With Customer [Line Items]
Net sales	156	135
BioPharma Solutions | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	52	44
BioPharma Solutions | International
Revenue From Contract With Customer [Line Items]
Net sales	104	91
Patient support systems
Revenue From Contract With Customer [Line Items]
Net sales	383	0
Patient support systems | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	295	0
Patient support systems | International
Revenue From Contract With Customer [Line Items]
Net sales	88	0
Front line care
Revenue From Contract With Customer [Line Items]
Net sales	294	0
Front line care | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	207	0
Front line care | International
Revenue From Contract With Customer [Line Items]
Net sales	87	0
Surgical solutions
Revenue From Contract With Customer [Line Items]
Net sales	78	0
Surgical solutions | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	37	0
Surgical solutions | International
Revenue From Contract With Customer [Line Items]
Net sales	41	0
Other
Revenue From Contract With Customer [Line Items]
Net sales	32	27
Other | U.S.
Revenue From Contract With Customer [Line Items]
Net sales	24	19
Other | International
Revenue From Contract With Customer [Line Items]
Net sales	$ 8	$ 8

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REVENUES - Lease Revenue (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Sales-type lease revenue	$ 3	$ 6
Operating lease revenue	122	34
Variable lease revenue	20	17
Total lease revenue	$ 145	$ 57

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BUSINESS OPTIMIZATION CHARGES - Additional Information (Details) $ in Millions	Mar. 31, 2022 USD ($)
Restructuring and Related Activities [Abstract]
Cumulative pre-tax costs incurred	$ 1,300
Expected additional pre-tax costs	$ 25

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BUSINESS OPTIMIZATION CHARGES - Summary of Business Optimization Charges (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 67	$ 25
Business Optimization Programs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	67	25
Costs to implement business optimization programs	14	2
Total business optimization charges	$ 81	$ 27

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BUSINESS OPTIMIZATION CHARGES - Components of Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 67	$ 25
COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	2	20
SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	65	5
R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0
Employee termination costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	49	21
Employee termination costs | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	2	16
Employee termination costs | SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	47	5
Employee termination costs | R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0
Contract termination and other costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	12
Contract termination and other costs | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0
Contract termination and other costs | SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	12
Contract termination and other costs | R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0
Asset impairments
Restructuring Cost and Reserve [Line Items]
Restructuring charges	6	4
Asset impairments | COGS
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	4
Asset impairments | SG&A
Restructuring Cost and Reserve [Line Items]
Restructuring charges	6	0
Asset impairments | R&D
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0	$ 0

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BUSINESS OPTIMIZATION CHARGES - Summary of Activity in Reserves Related to Restructuring Initiatives (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Restructuring Reserve [Roll Forward]
Charges	$ 67	$ 25
Severance and Other Employee Related Costs
Restructuring Reserve [Roll Forward]
Reserve, beginning balance	109
Charges	61
Payments	(31)
Currency translation	(2)
Reserve, ending balance	$ 137

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PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Pension benefits
Net periodic benefit cost
Service cost	$ 19	$ 22
Interest cost	24	18
Expected return on plan assets	(39)	(36)
Amortization of net losses and prior service costs	12	23
Net periodic cost (income)	16	27
OPEB
Net periodic benefit cost
Interest cost	1	1
Amortization of net losses and prior service costs	(3)	(2)
Net periodic cost (income)	$ (2)	$ (1)

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INCOME TAXES (Details)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Effective income tax rate	22.30%	14.50%
U.S. Federal statutory rate	21.00%

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EARNINGS PER SHARE - Reconciliation of Basic Shares to Diluted Shares (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Reconciliation of Basic Shares to Diluted Shares
Basic (in shares)	503	505
Effect of dilutive securities (in shares)	6	6
Diluted (in shares)	509	511

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EARNINGS PER SHARE - Additional Information (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from computation of EPS (in shares)	4	7

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) € in Millions	3 Months Ended
	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	May 31, 2019 EUR (€)	May 31, 2017 EUR (€)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	$ 0	$ 0
Derivative, fair value, terminated	0	0
Derivative, net investment terminated	0	$ 0
Deferred, net after-tax gains on derivative instruments	5,000,000
Undesignated derivative instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	940,000,000		$ 851,000,000
Net investment hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Accumulated pre-tax unrealized translation gain in AOCI	4,000,000
1.30% Senior Notes due May 2025
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Senior notes | €					€ 600
0.4% Senior Notes Due in May 2024
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Senior notes | €				€ 750
1.3% Senior Notes Due in May 2029
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Senior notes | €				€ 750
Foreign exchange contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, notional amount	$ 402,000,000		377,000,000
Maximum length of time hedge in cash flow hedge	12 months
Interest rate contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, fair value, net	$ 0		0
Interest rate swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, fair value, net	$ 0		$ 0

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Gains and Losses on Hedging Instruments (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax	$ 42	$ 114
Other comprehensive income (loss), cash flow hedge and net investment hedge, gain (loss), before reclassification, tax	39	118
Other comprehensive income (loss), reclassification adjustment from AOCI, cash flow hedges and net investment hedges, net of tax	1	(11)
Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax	0	0
Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax	0	0
Interest rate contracts | Interest expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax	(1)	(1)
Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax	(3)	4
Foreign exchange contracts | Cost of sales
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax	2	(10)
Foreign exchange contracts | Other (income) expense, net
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income, undesignated derivative instruments	$ 3	$ (22)

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Classification and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	$ 16	$ 8
Derivative liability, fair value	7	5
Derivative instruments designated as hedges
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	12	6
Derivative liability, fair value	2	3
Derivative instruments designated as hedges | Foreign exchange contracts | Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	12	6
Derivative instruments designated as hedges | Foreign exchange contracts | Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	2	3
Undesignated derivative instruments | Foreign exchange contracts | Prepaid expenses and other current assets
Derivatives, Fair Value [Line Items]
Derivative asset, fair value	4	2
Undesignated derivative instruments | Foreign exchange contracts | Accrued expenses and other current liabilities
Derivatives, Fair Value [Line Items]
Derivative liability, fair value	$ 5	$ 2

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Positions Presented On Net Basis (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Asset
Derivative asset, fair value	$ 16	$ 8
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(3)	(2)
Total, asset	13	6
Liability
Derivative liability, fair value	7	5
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet	(3)	(2)
Total, liability	$ 4	$ 3

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges (Details) - Long-term debt - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Derivatives, Fair Value [Line Items]
Carrying amount of hedged item	$ 101	$ 101
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item	$ 4	$ 4

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FAIR VALUE MEASUREMENTS - Summary of Financial Instruments Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Assets
Foreign exchange contracts	$ 16	$ 8
Debt securities	53	30
Marketable equity securities	8	10
Total assets	77	48
Liabilities
Foreign exchange contracts	7	5
Contingent payments related to acquisitions	124	143
Total liabilities	131	148
Quoted prices in active markets for identical assets (Level 1)
Assets
Foreign exchange contracts	0	0
Debt securities	0	0
Marketable equity securities	8	10
Total assets	8	10
Liabilities
Foreign exchange contracts	0	0
Contingent payments related to acquisitions	0	0
Total liabilities	0	0
Significant other observable inputs (Level 2)
Assets
Foreign exchange contracts	16	8
Debt securities	0	0
Marketable equity securities	0	0
Total assets	16	8
Liabilities
Foreign exchange contracts	7	5
Contingent payments related to acquisitions	0	0
Total liabilities	7	5
Significant unobservable inputs (Level 3)
Assets
Foreign exchange contracts	0	0
Debt securities	53	30
Marketable equity securities	0	0
Total assets	53	30
Liabilities
Foreign exchange contracts	0	0
Contingent payments related to acquisitions	124	143
Total liabilities	$ 124	$ 143

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FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Fair Value Disclosures [Line Items]
Cash and cash equivalents	$ 2,294	$ 2,951	$ 3,182
Other Assets
Fair Value Disclosures [Line Items]
Other equity investments without readily determinable fair values	110	114
Significant other observable inputs (Level 2)
Fair Value Disclosures [Line Items]
Money market funds, at carrying value	$ 426	$ 816

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FAIR VALUE MEASUREMENTS - Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Debt Securities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period	$ 30
Additions	21
Change in fair value recognized in earnings	0
Change in fair value recognized in AOCI	2
Payments	0
Fair value at end of period	53
Acquisition-related Costs
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value at beginning of period	143	$ 30
Additions	0	24
Change in fair value recognized in earnings	(17)	0
Change in fair value recognized in AOCI	0	0
Payments	(2)	(16)
Fair value at end of period	$ 124	$ 38

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FAIR VALUE MEASUREMENTS - Book Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Book values
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items]
Short-term debt	$ 200	$ 301
Current maturities of long-term debt and finance lease obligations	209	210
Long-term debt and finance lease obligations	16,765	17,149
Fair values
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items]
Short-term debt	200	301
Current maturities of long-term debt and finance lease obligations	209	212
Long-term debt and finance lease obligations	$ 16,221	$ 17,568

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SEGMENT INFORMATION - Summary of Financial Information for Our Segments (Details) $ in Millions	3 Months Ended
	Mar. 31, 2022 USD ($) segment	Mar. 31, 2021 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	4
Total net sales	$ 3,707	$ 2,946
Total segment operating income	163	390
Operating Segments
Segment Reporting Information [Line Items]
Total net sales	3,707	2,946
Total segment operating income	1,080	872
Operating Segments | Americas
Segment Reporting Information [Line Items]
Total net sales	1,626	1,560
Total segment operating income	610	599
Operating Segments | EMEA
Segment Reporting Information [Line Items]
Total net sales	699	738
Total segment operating income	119	135
Operating Segments | APAC
Segment Reporting Information [Line Items]
Total net sales	627	648
Total segment operating income	151	138
Operating Segments | Hillrom
Segment Reporting Information [Line Items]
Total net sales	755	0
Total segment operating income	$ 200	$ 0

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SEGMENT INFORMATION - Operating Income to Income Before Income Taxes Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total operating income	$ 163	$ 390
Interest expense, net	85	34
Other (income) expense, net	(16)	5
Income before income taxes	94	351
Operating Segments
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total operating income	1,080	872
Operating Segments | Hillrom
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total operating income	200	0
Corporate and other
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total operating income	(917)	$ (482)
Corporate and other | Hillrom
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total operating income	$ 219

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Label	Element	Value
Restricted Cash	us-gaap_RestrictedCash	$ 5,000,000