Raymond James Institutional Investors Conference Jay Saccaro, EVP & CFO March 5, 2019
Safe Harbor Statement This presentation includes forward- looking statements concerning Baxter’s financial results, business development activities, ca pital structure, cost savings initiatives, R&D pipeline, including results of clinical trials and planned product launches, Baxter’s long range plan (which includes financial outlook for 2019, 2020, and 2023) and other growth strategies. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: demand for and market acceptance of risks for new and existing products; product development risks; product quality or patient safety concerns; continuity, availability and pricing of acceptable raw materials and component supply; inability to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of a natural disaster or otherwise); breaches or failures of the company’s information technology systems or products, including by cyberattack, unauthorized use or theft; future actions of regulatory bodies and other governmental authorities, including FDA, the Department of Justice, the New York Attorney General and foreign regulatory agencies; failures with respect to compliance programs; future actions of third parties, including payers; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits (including the acquisitions of Claris Injectables and two surgical products from Mallinckrodt plc); the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions (including potential trade wars); fluctuations in foreign exchange and interest rates; any change in law concerning the taxation of income (including current or future tax reform), including income earned outside the United States and potential taxes associated with the Base Erosion and Anti-Abuse Tax; actions taken by tax authorities in connection with ongoing tax audits; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of the company’s cash flows from operati ons to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter’s most recent filing on Form 1 0-K and other Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to upd ate its forward- looking statements. 2
Baxter Profile: A Diversified And Global Portfolio 1 2018 Global Revenue ~$0 $0.5B .5B ~$0 $0.8B .8B Acute Therapies Advanced Surgery $11.1B 11.1B ~$0 $0.9B .9B ~$2 $2.7B .7B Clinical Nutrition Medication Delivery Americas 54% ~$ ~$2. 2.1B ~$3 $3.7B .7B EMEA 27% Pharmaceuticals Renal Care APAC 20% 1 Sales and related figures represent FY 2018; Other sales represent ~$0.5B. Totals may not foot due to rounding. 3
Product safety and Quality Best place to work Growth through innovation Industry leading performance Ou Our St Strat rategy egy Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery 4
Delivering On Our Strategy 2018 Business Highlights Building Momentum With Strong Focus on Capitalizing On New Product Launches Operational Performance And Geographic Expansion ► Delivered solid fourth-quarter 2018 earnings growth, largely driven ► Reallocating investment to higher-margin, faster-growing by operational performance and business transformation initiatives businesses ► Continuing momentum with new product launches, geographic ► Executing on a robust pipeline to provide meaningful innovations expansion, and evidence generation for patients and providers ► Focused on meeting long-term financial goals through strategic ► Enhanced capabilities along with increasing R&D efficiency enable execution and rigorous financial management accelerating launch cadence Executing Disciplined Focus On Significantly Enhancing Balance Sheet $ Business Transformation Flexibility To Deliver Value ► Implementing optimized organizational structure, transforming cost ► Focusing on operational improvement and effective working capital structure, and simplifying processes management to improve cash flow ► Establishing global centers of excellence to drive efficiencies in ► Returned value directly to shareholders via 19% dividend increase functional areas and over $2.4 billion of share repurchases in 2018 ► Simplifying portfolio and optimizing manufacturing footprint ► Maintaining financial optionality while thoroughly assessing capital investment opportunities 5
Strengthening And Extending Our Impact Market Enter Portfolio Development Adjacencies Innovation Executing on pipeline Driving growth through evidence Expanding beyond the core to opportunities and geographic generation, physician education, unlock new therapies and expansion and targeted market investments markets Strategic Execution Allows Long-Term Acceleration 6
Executing On Near-Term Launches To Fuel Growth 1 New Product Highlights Floseal Spectrum IQ Fast Prep Point of Care Infusion System 2018 2019 2020 Olimel N12 Prismax New Pump Platform 1 All references to “new products” and “launches” in this presentation include new product launches, line extensions and geogra phic 7 expansions, unless otherwise noted.
Driving Operational Excellence Through Business Transformation Zero-Based Organization Cumulative Savings vs. 2015 Rightsizing organization with reduced spans and layers ~$1.2B ~$1.1B ~$1.0B Zero-Based Spending Employing disciplined cost Focused on assessment to eliminate waste sustainability of business Portfolio Management Optimizing manufacturing transformation ~$ ~$0.4B footprint, R&D operations and initiatives 1 supply chain network Global Business Services Centralizing and streamlining support functions 2016 2018 2020 2023 2024+ 8
Creating Incremental Value Through Capital Deployment Reinvestment Strategically investing in higher-margin in Business opportunities to drive innovation Increased annual dividend rate by 19% in 2018; Dividends currently targeting ~35% dividend payout ratio over time Share Repurchased ~36 million Baxter shares in BAX Repurchases 2018 Continuing rigorous assessment of business Strategic M&A development and licensing opportunities 9
Thoroughly Assessing Business Development Opportunities Drive Capitalize On M& M&A Category Leadership Core Capabilities Objecti Ob jectives ves Rigorous Preserve Investment Financial Criteria Grade Credit Rating Disciplined Assessment Of Opportunities Considering Both Strategic Fit And Financial Criteria 10
Delivering A Solid Financial Outlook 1,2 Constant Revenue Adjusted Operating Adjusted Diluted Free Cash Growth Margin EPS Flow 3 20% - $3.60 – 21% $3.75 18.0% - $3.22 – ~$2.1B 18.4% $3.30 2% - 3% 2% 3% 17.4% $3.05 ~$1.6B $1.4B 2019 Guidance 4% 4% - 5% 5% 2018 – 2020 ~300 bps ~20% ~1.5x CAGR Outlook 2018 2019 2020 2018 2019 2020 2018 2019 2020 Actual Guidance Outlook Actual Guidance Outlook Actual Guidance Outlook 1 See www.baxter.com for information regarding non-GAAP financial metrics used in this presentation, including constant currency sales, 11 adjusted operating margin, adjusted diluted EPS, and free cash flow. 2 2019 figures reflect guidance provided in Q4 2018 Earnings Call (1/31/19); 2020 figures reflect guidance provided in 2018 Investor Conference (5/21/18). 3 Operating cash flow less capital expenditures.
Continuing Momentum In 2019 And Beyond • Increasing innovation to drive accelerated revenue growth • Maintaining strong cadence of product launches and geographic expansions • Realizing ongoing benefits of business transformation initiatives Strategically deploying capital to enhance value • and improve profitability 12
85+ year heritage of Strong saving and global business sustaining lives with great people Established One of the most market trusted brands leadership in medical products across portfolio Unique opportunity to create shareholder value 13
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