Fixed Income Investor Roadshow Jay Saccaro, EVP & CFO May 9, - - PowerPoint PPT Presentation

Fixed Income Investor Roadshow

Jay Saccaro, EVP & CFO May 9, 2019

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Safe Harbor Statement

This presentation includes forward-looking statements concerning Baxter’s financial results, business development activities, capital 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 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: failure to achieve the company’s long-term financial improvement goals and execute on the company’s business development strategies; 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 access 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; 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); 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; the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting the manufacture, sale or use of affected products or technology; the impact of global economic conditions (including potential trade wars); the impact of goodwill impairments; 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

• perations to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter’s most recent filing on

Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter’s website. Baxter does not undertake to update its forward-looking statements.

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Additional Disclaimers

Baxter has filed a registration statement (including a prospectus) with the Securities Exchange Commission (“SEC”). This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities. Any offering of securities in the future will be made only by means of the prospectus in that registration statement and a related prospectus supplement, which will be filed with the SEC. In the event that Baxter proceeds with an offering, you should read the prospectus and the related prospectus supplement and other documents Baxter has filed with the SEC for more complete information about Baxter and the offering. When available, you may obtain a copy of these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, Baxter, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and the related prospectus supplement if you request it. This presentation is not a prospectus for the purposes of the European Union's Directive 2003/71/EC (as amended or superseded), as implemented in the Member States of the European Economic Area (the “EEA”). The communication of this presentation is not being made, and has not been approved, by an authorized person for the purposes of section 21

• f the United Kingdom's Financial Services and Markets Act 2000, as amended (the “FSMA”). Accordingly, such presentation is not being

distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such presentation as a financial promotion is only being made to those persons in the United Kingdom who have professional experience in matters relating to investments and who fall within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotion Order”)), or who fall within Article 49(2)(a) to (d) of the Financial Promotion Order, or who are any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order.

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Baxter Credit Highlights

► Target Solid Investment Grade Ratings and Commercial Paper Access ► Strong, Accelerating adjusted EBITDA Growth and Cash Flow Generation ► Efficient Capital Structure, Conservative Leverage Ratio and Robust Liquidity Profile

► Well laddered debt maturity profile ► Excellent liquidity with ~$2B in accessible global cash balances ► Undrawn $1.5B USD-denominated and EUR 200M EUR-denominated Revolving Credit Facilities

► Balanced Platform of Business Development, Balance Sheet Management, and Stakeholder Returns

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Baxter Profile: A Diversified And Global Portfolio1

Acute Therapies

~$0 $0.5B .5B

Advanced Surgery

~$0 $0.8B .8B

Clinical Nutrition

~$0 $0.9B .9B ~$2 $2.7B .7B

Medication Delivery

~$ ~$2. 2.1B ~$3 $3.7B .7B

Renal Care Pharmaceuticals

$11.1B 11.1B

2018 Global Revenue

1Sales and related figures represent FY 2018; Other sales represent ~$0.5B. Totals may not foot due to rounding.

Americas 53% EMEA 27% APAC 20%

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Delivering On Our Strategy

2018 Business Highlights

Executing Disciplined Focus On Business Transformation Building Momentum With Strong Focus on Operational Performance

► Implementing optimized organizational structure, transforming cost

structure, and simplifying processes

► Establishing global centers of excellence to drive efficiencies in

functional areas

► Simplifying portfolio and optimizing manufacturing footprint ► Delivered solid 2018 earnings growth, largely driven by operational

performance and business transformation initiatives

► Continuing momentum with new product launches, geographic

expansion, and evidence generation

► Focused on meeting long-term financial goals through strategic

execution and rigorous financial management

Capitalizing On New Product Launches And Geographic Expansion Significantly Enhancing Balance Sheet Flexibility To Deliver Value

► Focusing on operational improvement and effective working capital

management to improve cash flow

► Returned value directly to shareholders via dividends and share

repurchases

► Maintaining financial optionality while thoroughly assessing

capital investment opportunities

► Reallocating investment to higher-margin, faster-growing

businesses

► Executing on a robust pipeline to provide meaningful innovations

for patients and providers

► Enhanced capabilities along with increasing R&D efficiency enable

accelerating launch cadence

$

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Baxter Confidential — Do not distribute without prior approval | 7

Performance Across Key Metrics, 2016–20181

2016 2017 2018 2016 2017 2018 2016 2017 2018 2016 2017 2018

Adjusted Earnings Per Diluted Share Adjusted Operating Margin Global Revenues Free Cash Flow2

$10.2B $10.6B $905M $1,219M 13.8% 16.3% $1.96 $2.48 $11.1B $3.05 17.4% $1,415M

1See the appendix to this presentation for information regarding non-GAAP financial metrics used in this chart, including adjusted operating

margin, adjusted diluted EPS, and free cash flow. 2Operating cash flow less capital expenditures.

~+360bps + 56% + 9% + 56%

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Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery

Ou Our St Strat rategy egy

Industry leading performance Best place to work Product safety and Quality Growth through innovation

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Market Development Enter Adjacencies Portfolio Innovation

Executing on pipeline

• pportunities and geographic

expansion Driving growth through evidence generation, physician education, and targeted market investments Expanding beyond the core to unlock new therapies and markets

Strategic Execution Allows Long-Term Acceleration

Strengthening And Extending Our Impact

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Culture of innovation with the right

• rganization and talent in place

Resources aligned with high-growth

• pportunities

Accelerated pace of incremental and transformative innovation Successful execution of commercial launches across business portfolio

1All references to “new products” and “launches” in this presentation include new product launches, line extensions and geographic expansions, unless otherwise noted.

.

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Robust Pipeline Accelerating Growth1

New products, line extensions and geographic expansions fuel $1.7 billion of incremental sales by 2023

New Product Launches Powered By:

Baxter Confidential — Do not distribute without prior approval |

2016 2018

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Driving Operational Excellence Through Business Transformation

Zero-Based Organization

Rightsizing organization with reduced spans and layers

Zero-Based Spending

Employing disciplined cost assessment to eliminate waste

Portfolio Management

Optimizing manufacturing footprint, R&D operations and supply chain network

Global Business Services

Centralizing and streamlining support functions

Cumulative Savings vs. 2015

~$ ~$0.4B ~$1.0B Focused on sustainability

• f business

transformation initiatives

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Creating Incremental Value Through Capital Deployment Strategic M&A

BAX

Share Repurchases Reinvestment in Business Dividends

Targeting ~35% dividend payout ratio over the long term Repurchased Baxter stock in 2018 with cash

• n hand

Continue disciplined and rigorous assessment of business development and licensing opportunities R&D investment focused on higher-margin

• pportunities

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Thoughtfully Assess Business Development Opportunities

Drive Category Leadership Rigorous Financial Criteria Preserve Investment Grade Credit Rating Capitalize On Core Capabilities

M& M&A Ob Objecti jectives ves

Disciplined Assessment Of Opportunities Considering Both Strategic Fit And Financial Criteria

Baxter Confidential — Do not distribute without prior approval |

Building A Great Place To Work

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A noted leader in corporate social responsibility Recognized as an outstanding employer

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European Business Overview

• Baxter has a significant

manufacturing and operating footprint in Europe

• Expanded European presence

following the acquisition of Gambro AB, a privately held global medical technology company and leader in dialysis products based in Lund, Sweden

• ~27% of 2018 net sales in EMEA
• ~13,000 Employees in Europe1
• Currently, 18 manufacturing

facilities across 10 countries in Europe

Switzerland erland Germany Unit ited ed King ngdo dom Irelan land Italy ly France nce Spain in Malta Belgium gium Baxter r Manufac actu turing ring Presence nce Sweden en

Baxter Confidential — Do not distribute without prior approval |

• 1. As of March 26, 2019.

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• 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

Continuing Momentum In 2019 And Beyond

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Baxter Liquidity and Credit Highlights

► The Euro Bond Market remains attractive to Baxter

► Baxter’s well distributed debt ladder allows for flexibility in tenor selection ► Limits long term refinancing and interest rate risk to company and investors ► Baxter has $1.7B in unused revolver capacity

• 1. Represents Adjusted EBITDA for full year 2018 plus the Adjusted EBITDA for the first quarter 2019 less the Adjusted EBITDA for the first quarter of 2018. See the

appendix to this presentation for the related reconciliation. 2. See the appendix to this presentation for the related reconciliation

2

$0 $100 $200 $300 $400 $500 $600 $700 $800 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046

Maturity Profile ($MM) as of March 31, 2019

US & non EUR Debt Existing EUR Debt CP

Baxter Confidential — Do not distribute without prior approval | As of 3/31/2019 Total Debt Outstanding $4,249 LTM Adj. EBITDA 1 $2,664 Leverage 2 1.59 x

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Baxter Credit Highlights

► Target Solid Investment Grade Ratings and Commercial Paper Access ► Strong, Accelerating adjusted EBITDA Growth and Cash Flow Generation ► Efficient Capital Structure, Conservative Leverage Ratio and Robust Liquidity Profile

► Well laddered debt maturity profile ► Excellent liquidity with ~$2B in accessible global cash balances ► Undrawn $1.5B USD-denominated and EUR 200M EUR-denominated Revolving Credit Facilities

► Balanced Platform of Business Development, Balance Sheet Management, and Stakeholder Returns

Baxter Confidential — Do not distribute without prior approval |

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Unique opportunity to create

value

85+ year heritage of

saving and sustaining lives

Strong

global business

with great people One of the most

trusted brands

in medical products Established

market leadership

across portfolio

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Appendix – Non-GAAP Reconciliation and Additional Financial Information

This presentation contains financial measures that are not calculated in accordance with generally accepted accounting principles (“GAAP”). The non-GAAP financial measures include adjusted EBITDA, adjusted EBITDA margin, constant currency sales, adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share from continuing operations, free cash flow, net debt, net debt to adjusted EBITDA ratio and leverage ratio. Adjusted EBITDA, adjusted EBITDA margin, adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings from continuing operations exclude special items. Special items are excluded because they are highly variable, difficult to predict or unusual and of a size that may substantially impact Baxter’s reported operations for a period. Additionally, intangible asset amortization is excluded as a special item to facilitate an evaluation of current and past operating performance and is consistent with how management and Baxter’s Board of Directors internally assess performance. Net sales amounts are presented on a constant currency basis. This measure provides information on the change in net sales assuming that foreign currency exchange rates have not changed between the prior and current periods. Net sales measures are used to enhance comparability between periods and better identify operating trends. Free cash flow represents operating cash flow less capital expenditures. This measure provides an indication of cash flow that may be available to fund investments in future growth initiatives. Non-GAAP financial measures may provide a more complete understanding of Baxter’s operations and can facilitate a fuller analysis of Baxter’s results of operations, particularly in evaluating performance from one period to another. Management believes that non-GAAP financial measures, when used in conjunction with the results presented in accordance with GAAP and the reconciliations to corresponding GAAP financial measures, may enhance an investor’s overall understanding of Baxter’s past financial performance. Accordingly, management uses these non-GAAP measures internally in financial planning, to monitor business unit performance, and in some cases for purposes of determining incentive compensation. This information should be considered in addition to, and not as substitutes for, information prepared in accordance with GAAP. Baxter strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by Baxter may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

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Appendix – Historical Reconciliations

► GAAP Net Sales Growth Rate Reconciliation to Constant Currency Net Sales Growth Rate

Q1 2019 Q1 2018 2018 2017 GAAP Net Sales Growth Rate

• 2%

8% 5% 4% Impact of Foreign Currency 4%

• 4%
• 1%

0% Constant Currency Net Sales Growth 2% 4% 4% 4%

Baxter Confidential — Do not distribute without prior approval |

► GAAP Net Income Reconciliation to Adjusted EBITDA and Adjusted EBITDA Margin

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Appendix – Historical Reconciliations

Baxter Confidential — Do not distribute without prior approval |

Reconciliation of net income to adjusted EBITDA $ in millions GAAP Loss from Income Depreciation Net Discontinued Tax Net & Special Adjusted Adjusted Income Operations Expense Interest Amortization Items (6) EBITDA Net Sales EBITDA Margin Full year 2017 717 $ 7 $ 493 $ 55 $ 761 $ 284 $

(1)

2,317 $ 10,561 $ 21.9% Q1 2018 389 $

• $

49 $ 12 $ 192 $ (26) $

(2)

616 $ Full year 2018 1,624 $ 6 $ 63 $ 45 $ 785 $ 134 $

(3)

2,657 $ 11,127 $ 23.9% Q1 2019 347 $

• $

44 $ 18 $ 195 $ 19 $

(4)

623 $ 11,082 $

(5)

24.0%

(5)

Appendix – Historical Reconciliations

► GAAP Net Income Reconciliation to Adjusted EBITDA and Adjusted EBITDA Margin

1. Special items for the twelve months ended December 31, 2017 consist of charges of $159 million related to business optimization initiatives (which included charges of $70 million related to

restructuring activities and $89 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs), $28 million of acquisition and integration expenses related to the acquisition of Claris Injectables Limited (Claris), $21 million of charges related to litigation and contractual disputes for businesses or arrangements in which the company is no longer engaged or a party thereto, $10 million of costs incurred related to the Baxalta separation, $28 million of charges related to the impact of Hurricane Maria on the company's operations in Puerto Rico, $33 million related to the deconsolidation of the company’s Venezuelan operations and a $17 million net charge related to SIGMA SPECTRUM infusion pump inspection and remediation activities. These items were partially offset by a $12 million benefit related to an adjustment to historical product reserves.

2. Special items for the three months ended March 31, 2018 consist of a benefit of $80 million for the settlement of certain claims related to the acquired operations of Claris, partially offset by charges

• f $37 million related to business optimization initiatives (which included charges of $12 million related to restructuring activities and $25 million of costs to implement business optimization

programs, which primarily included external consulting and internal transition costs), $10 million of charges related to certain product litigation and $7 million of acquisition and integration expenses related to the acquisition of Claris.

3. Special items for the twelve months ended December 31, 2018 consist of charges of $211 million related to business optimization initiatives (which included charges of $117 million related to

restructuring activities and $94 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs), $49 million of acquisition and integration expenses related to the acquisitions of Claris and the RECOTHROM and PREVELEAK products, $7 million of upfront payments related to R&D collaborations and license agreements, $10 million of charges related to certain product litigation and $9 million of charges related to updating the company’s 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 will become effective in 2020. These charges were partially offset by a net benefit of $6 million related to an adjustment to the company’s accrual for SIGMA SPECTRUM infusion pump inspection and remediation activities, a benefit of $42 million related to insurance recoveries as a result of losses incurred due to Hurricane Maria, a gain of $24 million from remeasuring the company’s previously-held investment to fair value upon acquisition of a controlling interest in its joint venture in Saudi Arabia and a benefit of $80 million for the settlement of certain claims related to the acquired operations of Claris.

4. Special items for the three months ended March 31, 2019 consist charges of $35 million related to business optimization initiatives (which included charges of $25 million related to restructuring

activities and $10 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs), $9 million of acquisition and integration expenses related to the acquisitions of Claris and the RECOTHROM and PREVELEAK products in prior periods, $4 million of acquired in-process research and development assets, and $4 million related to updating the company’s 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 will become effective in 2020, partially offset by a benefit of $33 million related to an allocation of insurance proceeds received pursuant to a settlement and cost-sharing agreement for a legacy product-related matter.

5. Calculated for the 12 month period ended 3/31/2019. 6. Special items, as compared to those presented with the reconciliations to adjusted operating margin, adjusted net income or adjusted diluted EPS from continuing operations, exclude depreciation and amortization expense and income taxes, which are included in the depreciation and amortization and income tax expense columns.

Baxter Confidential — Do not distribute without prior approval | 23

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Appendix

► GAAP Operating Income Reconciliation to Adjusted Operating Income and Margin

(1) Special items for the year ended December 31, 2016 consist of intangible asset amortization expense of $163 million, charges of $409 million related to business optimization initiatives (which included charges of $285 million related to restructuring activities, $65 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs, $33 million of accelerated depreciation and $26 million of Gambro integration costs), $54 million of costs incurred related to the Baxalta separation and a charge of $51 million for an intangible asset impairment primarily related to developed technology, partially offset by a benefit of $18 million related to an adjustment to SIGMA SPECTRUM infusion pump inspection and remediation activities. Special items for the year ended December 31, 2017 consist of intangible asset amortization expense of $154 million, charges of $169 million related to business optimization initiatives (which included charges of $70 million related to restructuring activities, $89 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs, and $10 million of accelerated depreciation), $28 million of acquisition and integration expenses related to the acquisition of Claris Injectables Limited (Claris), $21 million of charges related to litigation and contractual disputes for businesses or arrangements in which the company is no longer engaged or a party thereto, $19 million of costs incurred related to the Baxalta separation, $32 million of charges related to the impact of Hurricane Maria on the company's operations in Puerto Rico and a $17 million net charge related to SIGMA SPECTRUM infusion pump inspection and remediation activities. These items were partially offset by a $12 million benefit related to an adjustment to historical product reserves. Special items for the year ended December 31, 2018 consist of intangible asset amortization expense of $169 million, charges of $220 million related to business optimization initiatives (which included charges of $117 million related to restructuring activities, $94 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs, and $9 million of accelerated depreciation), $50 million of acquisition and integration expenses related to the acquisitions of Claris and the RECOTHROM and PREVELEAK products, $7 million of upfront payments related to R&D collaborations and license agreements, $10 million of charges related to certain product litigation and $9 million of charges specific to updating the company’s 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 will become effective in 2020. These charges were partially offset by a net benefit of $6 million related to an adjustment to the company’s accrual for SIGMA SPECTRUM infusion pump inspection and remediation activities, a benefit of $42 million related to insurance recoveries as a result of losses incurred due to Hurricane Maria and a benefit of $80 million for the settlement of certain claims related to the acquired operations of Claris. Special items for the three months ended March 31, 2018 consist of intangible asset amortization expense of $41 million, charges of $38 million related to business optimization initiatives (which included charges of $12 million related to restructuring activities, $25 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs, and $1 million of accelerated depreciation), $10 million of charges related to certain product litigation and $7 million of acquisition and integration expenses related to the acquisition of Claris, partially offset by a benefit of $80 million for the settlement of certain claims related to the acquired operations of Claris. Special items for the three months ended March 31, 2019 consist of intangible asset amortization expense of $43 million, charges of $38 million related to business optimization initiatives (which included charges of $25 million related to restructuring activities, $10 million of costs to implement business optimization programs, which primarily included external consulting and internal transition costs, and $3 million of accelerated depreciation), $10 million of acquisition and integration expenses related to the acquisitions of Claris and the RECOTHROM and PREVELEAK products in prior periods, $4 million of acquired in-process research and development assets and $4 million related to updating the company’s 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 will become effective in 2020, partially offset by a benefit of $33 million related to an allocation of insurance proceeds received pursuant to a settlement and cost-sharing agreement for a legacy product-related matter.

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2016 2017 2018 Q1 2018 Q1 2019 Operating Income 745 1,291 1,599 432 384 % of Net Sales 7.3% 12.2% 14.4% 16.1% 14.6% Impact of Special Items (1) 659 428 337 16 66 Adjusted Operating Income 1,404 1,719 1,936 448 450 % of Net Sales 13.8% 16.3% 17.4% 16.7% 17.1%

Appendix

► GAAP Net Income Reconciliation to Adjusted Net Income

Q1 2019 Net income 347 $ Impact of Special Items (1) 52 Adjusted net income 399 $

(1) Special items for the three months ended March 31, 2019 consist of intangible asset amortization expense of $43 million, charges of $38 million related to business optimization initiatives (which included a charge of $25 million related to restructuring activities, $10 million of costs to implement business optimization programs which primarily included external consulting fees and internal transition costs, and $3 million of accelerated depreciation), $10 million of acquisition and integration expenses related to the company’s acquisitions of Claris Injectables Limited (Claris) and the RECOTHROM and PREVELEAK products in prior periods, $4 million for the 2019 acquisition of an in-process research and development asset and $4 million related to updating the company’s 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 will become effective in 2020, partially offset by a $33 million benefit related to an allocation of insurance proceeds received pursuant to a settlement and cost-sharing agreement for a legacy product-related matter and the tax impact of special items of $14 million.

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Appendix

► GAAP Diluted EPS from Continuing Operations Reconciliation to Adjusted Diluted EPS from Continuing Operations

(1) Special items, net of tax, for the year ended December 31, 2016 consist of net realized gains of $8.07 related to the debt-for-equity exchanges of the company’s retained shares in Baxalta for certain of the company’s indebtedness, the exchange of retained shares in Baxalta for Baxter shares and the contribution of retained shares in Baxalta to Baxter’s U.S. pension fund; a net benefit of $0.02 related to the settlement of an income tax matter in the company’s non-wholly owned joint venture in Turkey; and a net benefit of $0.02 related to SIGMA SPECTRUM infusion pump inspection and remediation activities. Partially offsetting the benefits were intangible asset amortization expense of $0.21, charges of $0.53 related to business

• ptimization initiatives, $0.07 of costs incurred related to the Baxalta separation, a charge of $0.07 for an intangible asset impairment primarily related to developed technology and $0.18 related to a net debt extinguishment loss related to the March

2016 debt-for-equity exchange for certain of the company’s indebtedness and certain debt redemptions. Special items, net of tax, for the year ended December 31, 2017 consist of intangible asset amortization expense of $0.19, charges of $0.21 related to business optimization initiatives, $0.04 of acquisition and integration expenses related to the acquisition of Claris Injectables Limited (Claris), $0.03 of charges related to litigation and contractual disputes for businesses or arrangements in which the company is no longer engaged or a party thereto, a net charge of $0.02 related to SIGMA SPECTRUM infusion pump inspection and remediation activities partially offset by a benefit related to an adjustment to historical product reserves, $0.02 of costs incurred related to the Baxalta separation, $0.06 of charges related to the impact of Hurricane Maria on the company’s operations in Puerto Rico, $0.04 related to the deconsolidation of the company’s Venezuelan operations and a net tax expense of $0.58 related to the estimated impact of tax reform on the company’s tax related assets and liabilities, partially offset by a benefit of $0.02 related to an adjustment to the company’s historical rebates and discount reserve. Special items, net of tax, for the year ended December 31, 2018 consist of intangible asset amortization expense of $0.25, charges of $0.32 related to business optimization initiatives, $0.07 of acquisition and integration expenses related to the acquisitions of Claris and the RECOTHROM and PREVELEAK products, $0.01 of upfront payments related to R&D collaborations and license agreements, $0.01 of charges related to certain product litigation and $0.01 of costs related to updating the company’s 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 will become effective in 2020. These charges were partially offset by a benefit of $0.14 for the settlement of certain claims related to the acquired operations of Claris, a net tax benefit of $0.36 primarily related to an update to the estimated impact of U.S. federal tax reform previously made by us, a gain of $0.04 from remeasuring the company’s previously-held investment to fair value upon acquisition of a controlling interest in its joint venture in Saudi Arabia, a benefit of $0.06 related to insurance recoveries as a result of losses incurred due to Hurricane Maria and a net benefit of $0.01 related to an adjustment to the company’s accrual for SIGMA SPECTRUM infusion pump inspection and remediation activities. Special items, net of tax, for the three months ended March 31, 2018 consist of intangible asset amortization expense of $0.06, charges of $0.06 related to business optimization initiatives, $0.01 of charges related to certain product litigation and $0.01 of acquisition and integration expenses related to the acquisition of Claris, partially offset by a benefit of $0.14 for the settlement of certain claims related to the acquired operations of Claris. Special items, net of tax, for the three months ended March 31, 2019 consist of intangible asset amortization expense of $0.06, charges of $0.06 related to business optimization initiatives, $0.01 of acquisition and integration expenses related to the acquisitions of Claris and the RECOTHROM and PREVELEAK products in prior periods, $0.01 for the 2019 acquisition of an in-process research and development asset and $0.01 related to updating the company’s 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 will become effective in 2020, partially offset by a benefit of $0.05 related to an allocation of insurance proceeds received pursuant to a settlement and cost-sharing agreement for a legacy product-related matter.

Baxter Confidential — Do not distribute without prior approval |

2016 2017 2018 Q1 2018 Q1 2019 Diluted EPS from Continuing Operations 9.01 $ 1.30 $ 2.99 $ 0.71 $ 0.66 $ Impact of Special Items (1) (7.05) $ 1.18 $ 0.06 $ (0.01) $ 0.10 $ Adjusted Diluted EPS from Continuing Operations 1.96 $ 2.48 $ 3.05 $ 0.70 $ 0.76 $

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Appendix

► GAAP cash flows from operations – continuing operations to free cash flow

Baxter Confidential — Do not distribute without prior approval |

2016 2017 2018 Q1 2018 Q1 2019 Cash flows from operations - continuing operations 1,624 $ 1,853 $ 2,096 $ 447 $ 148 $ Capital expenditures 719 634 681 155 198 Free cash flow 905 $ 1,219 $ 1,415 $ 292 $ (50) $

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Appendix

►GAAP Total Debt Reconciliation to Net Debt and Net Debt to Adjusted EBITDA Ratio ►Total Leverage Ratio

Baxter Confidential — Do not distribute without prior approval | 28

December 31, 2018 March 31, 2019 Short-term debt 2 $ 796 $ Long-term debt and finance lease obligations (including current portion) 3,475 3,453 Less: cash and cash equivalents (1,832) (1,908) Net debt 1,645 $ 2,341 $ Adjusted EBITDA¹ 2,657 $ 2,664 $ Net debt to adjusted EBITDA ratio 0.62 0.88 December 31, 2018 March 31, 2019 Short-term debt 2 $ 796 $ Long-term debt and finance lease obligations (including current portion) 3,475 3,453 Total debt 3,477 $ 4,249 $ Adjusted EBITDA¹ 2,657 $ 2,664 $ Leverage Ratio 1.31 1.59 ¹ Adjusted EBITDA for March 31, 2019 represents adjusted EBITDA for full year 2018 plus adjusted EBITDA for the three months ended March 31, 2019 less adjusted EBITDA for the three months ended March 31, 2018

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Appendix

►Summary of cumulative annual pre-tax savings through Business Transformation

2016 2018 Restructuring Actions $248 $535 Manufacturing Improvements $48 $109 Other Cost Reduction Initiatives $119 $322 Total $415 $967