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DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2025
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS
A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. The condensed consolidated financial statements reflect discontinued operations presentation as described below.
Discontinued Operations - Kidney Care
On January 31, 2025, we completed the sale of our Kidney Care business to Carlyle for an aggregate purchase price of $3.80 billion in cash, subject to certain closing cash, working capital and debt adjustments. After giving effect to certain adjustments, we received approximately $3.71 billion pre-tax cash proceeds at closing of the transaction prior to giving effect to certain post-closing adjustments. We recognized a pre-tax gain on the sale of $191 million ($111 million net of tax). In the third quarter of 2025, we recognized a pre-tax reduction of the gain on the sale of $55 million as a result of final working capital adjustments made in accordance with the related EPA. For the nine months ended September 30, 2025, we recognized a pre-tax gain on sale of $115 million.
We concluded that our Kidney Care business met the criteria to be classified as held-for-sale in August 2024. We analyzed the quantitative and qualitative factors relevant to the sale of our Kidney Care business, including its significance to our overall net income (loss), earnings (loss) per share, and net assets, and determined that those conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying condensed consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation.
Upon closing of the sale of the Kidney Care business, pursuant to the EPA, Baxter and Vantive entered into several agreements, including a Manufacturing and Supply Agreement (Kidney Care MSA), a Transition Services Agreement (Kidney Care TSA), a Long Term Master Services Agreement, a Distribution Agreement and certain other arrangements providing for short-term supply of saline products, and an Intellectual Property Agreement. Pursuant to the Kidney Care MSA, Baxter and the Kidney Care divested entities provide each other with certain dialysis-related products, other products, product components and fulfillment services for up to 10 years post-closing (with certain extension rights and early exit rights as provided therein). Pursuant to the Kidney Care MSA, our sales to Vantive are recognized in net sales in the condensed consolidated statements of income (loss). Pursuant to the Kidney Care TSA, Baxter and the entities that were divested in connection with the Kidney Care sale (the Kidney Care divested entities) provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights and early exit rights as provided therein) to help ensure business continuity and help minimize disruptions to the operations of both parties post-closing. Services provided under the Kidney Care TSA include information technology applications and support, supply chain and certain other corporate and administrative services. Billings by us under the Kidney Care TSA are recorded in other operating income, net in the condensed consolidated statements of income. The costs to provide each respective service is recorded in the applicable expense category in the condensed consolidated statements of income (loss).
In accordance with the EPA, we have agreed to indemnify Vantive for certain items, including taxes imposed on or with respect to the Kidney Care divested entities, for pre-closing tax periods. The net indemnification liability as of September 30, 2025 was $57 million. Further, in accordance with the EPA, Baxter recorded a contingent liability for payments to reimburse Vantive for qualifying capital expenditures of $133 million over a period of three years post sale. The contingent liability as of September 30, 2025 was $124 million based on payments made to date.
Certain of the business guarantees originally entered by us on behalf of the Kidney Care business were not released prior to the completion of the sale and remain outstanding. These legacy guarantees primarily relate to certain global employee benefit matters, leases, performance contracts and ones to support regulatory requirements of the Kidney Care business. As of September 30, 2025, the total amount of Kidney Care business guarantees retained by us is approximately $230 million. Under terms of the EPA, Carlyle has agreed to indemnify us for any cost or expense, or payments made in the future under these arrangements.
Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations
The following tables summarize the major classes of line items included in income (loss) from discontinued operations, net of tax, for the three and nine months ended September 30, 2025 and 2024:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2025202420252024
Net sales$— $1,155 $352 $3,375 
Cost of sales— 731 206 2,125 
Gross margin— 424 146 1,250 
Selling, general and administrative expenses— 278 116 874 
Research and development expenses— 41 16 140 
Goodwill impairment— — — 430 
Other operating income, net— (1)— (1)
Operating income (loss)— 106 14 (193)
Interest expense, net— 1 13 — 
Other (income) expense, net— (8)7 (2)
Income (loss) from discontinued operations before gain on disposition and income taxes— 113 (6)(191)
Gain (loss) on disposition(55)— 115 — 
Income tax expense (benefit)(60)30 73 99 
Income (loss) from discontinued operations, net of tax5 83 36 (290)
Less: Net income attributable to noncontrolling interest included in discontinued operations— 4 — 9 
Net income (loss) attributable to Baxter stockholders included in discontinued operations$5 $79 $36 $(299)
For the three and nine months ended September 30, 2025, settlement of certain net working capital adjustments made in accordance with the EPA and increased indemnification liabilities reduced the gain from the sale of our Kidney Care business. For the three months ended September 30, 2024, selling, general and administrative expenses (SG&A) includes $69 million of separation-related costs incurred in connection with the sale of our Kidney Care business. For the nine months ended September 30, 2025 and 2024, SG&A includes $37 million and $236 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business.
In the third quarter of 2025, a $41 million tax benefit was allocated to discontinued operations due to recording of reserves for uncertain tax positions related to the transfer pricing matters for tax years 2021 through 2025. See Note 12 for additional information.
The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations, related to our Kidney Care business, in the condensed consolidated balance sheets as of December 31, 2024:
(in millions)December 31, 2024
Cash and cash equivalents$648 
Accounts receivable, net of allowances942 
Inventories821 
Prepaid expenses and other current assets200 
Current assets of discontinued operations2,611 
Property, plant and equipment, net1,516 
Goodwill265 
Other intangible assets, net148 
Operating lease right-of-use assets204 
Other non-current assets367 
Non-current assets of discontinued operations2,500 
Assets of discontinued operations$5,111 
Current maturities of finance lease obligations$1 
Accounts payable344 
Accrued expenses and other current liabilities585 
Current liabilities of discontinued operations930 
Long-term finance lease obligations, less current portion37 
Operating lease liabilities173 
Other non-current liabilities344 
Non-current liabilities of discontinued operations554 
Liabilities of discontinued operations$1,484