Baxter International Restructures Reporting Segments to Two Units, Recasts Historical Financial Data Effective Q2 2026

Baxter's Shift from Three Segments to Two Under a New Operating Model

Baxter International disclosed on July 14, 2026, that it has restructured its reportable business segments as part of a broader effort to streamline operations and improve organizational alignment. Previously, the company reported financial results across three segments: Medical Products & Therapies, Healthcare Systems & Technologies, and Pharmaceuticals. Under the new structure, those three segments have been consolidated into two: Medical Products & Therapies (MPT) and Healthcare Systems & Technologies (HST).

The announcement states that the change is intended to better align decision-making, cost structure, and execution across the company's businesses. According to the disclosure, the restructuring reflects the manner in which the company's chief operating decision maker — identified as Baxter's President and Chief Executive Officer — now allocates resources and assesses the performance of the company's operations. The new two-segment model became effective for the quarterly period ended June 30, 2026.

Where the Former Pharmaceuticals Segment Now Sits Within MPT

The most significant structural change in the reorganization is the absorption of the former Pharmaceuticals segment into the MPT segment. Specifically, the filing states that the former Pharmaceuticals segment is now reported within the Infusion Therapies & Platforms (ITP) division of the MPT segment. This division, alongside the Advanced Surgery division, forms the full scope of the newly configured MPT segment.

In addition to this consolidation, certain sales of products and services provided directly through some of Baxter's manufacturing facilities — which had previously been reported under an "Other" category in relation to ITP — are also now captured within the ITP division of MPT. This reallocation means investors reviewing historical comparisons will see a broader MPT segment than was previously reported, making the recast data provided by the company essential for accurate period-over-period analysis.

Product Offerings Under the Newly Defined Medical Products & Therapies Segment

The MPT segment, as redefined, encompasses a broad range of products. The disclosure outlines that MPT covers sales of sterile intravenous (IV) solutions, infusion systems, administration sets, and parenteral nutrition therapies. It also includes surgical hemostat, sealant, and adhesion prevention products, all of which are grouped under the Advanced Surgery division.

The ITP division within MPT further captures specialty injectable pharmaceuticals, inhaled anesthesia, and drug compounding products, as well as products and services provided directly through certain manufacturing facilities. This expansive product footprint reflects Baxter's intent to unify what had previously been distinct reporting categories into a single, more cohesive business unit that investors can evaluate holistically.

Healthcare Systems & Technologies Segment Remains Structurally Unchanged

Unlike the MPT segment, the Healthcare Systems & Technologies (HST) segment has not undergone structural changes in terms of its product offerings or divisional composition. The filing states that this segment is "unchanged" and continues to operate through its Front Line Care and Care & Connectivity Solutions divisions.

HST's product scope continues to include connected care solutions and collaboration tools, smart bed systems, patient monitoring systems, diagnostic technologies, and respiratory health devices. The segment also covers advanced equipment for the surgical space, including operating room integration technologies, precision positioning devices, and other accessories. The unchanged nature of HST means comparative data for this segment may be more straightforward for analysts to interpret relative to prior periods, though the adjustments in corporate cost allocations described below still apply.

Updated Corporate Cost Allocation Methodology Affects Both Segments

Beyond the realignment of segments themselves, Baxter has also updated its approach to corporate cost allocations. The disclosure states that certain shared corporate expenses will now remain unallocated rather than being fully distributed to the two reportable segments, as had been the practice previously. This represents a meaningful methodological shift that could influence how segment-level operating results appear when compared to historical data under the old allocation framework.

Investors and analysts modeling segment profitability should be aware that the combination of the segment consolidation and the change in cost allocation methodology means that raw comparisons between new and old segment financials — without reference to the recast data — could be misleading. The company has emphasized that these changes do not impact its previously issued consolidated financial statements, with effects limited solely to the segment disclosures.

Scope and Coverage of the Unaudited Recast Financial Information

To facilitate comparability, Baxter has prepared and furnished unaudited recast segment and product category financial information covering a substantial historical window. The recast tables included in the accompanying Exhibit 99.1 cover the quarterly period ended March 31, 2026, the full years ended December 31, 2025 and December 31, 2024, and each of the quarterly periods within those two calendar years. The company describes this collectively as the "Unaudited Recast Financial Information."

The filing is explicit that this recast data does not constitute a restatement of previously issued financial statements. Baxter confirmed that the recast does not affect the company's reported net income, earnings per share, total assets, or stockholders' equity for any of the previously reported periods. The information is being provided solely to aid in comparability as analysts and investors begin evaluating results under the new two-segment structure. The recast data is intended to be used alongside Baxter's previously filed annual reports, quarterly reports, and earnings releases for the relevant periods.

Treatment of Remaining "Other" Sales and the Kidney Care MSA

Following the reallocation of ITP-related manufacturing sales into the MPT segment, the filing clarifies what remains in the "Other" sales category. The disclosure states that the remaining Other sales not allocated to a segment consist solely of sales made to Vantive Health LLC pursuant to a related Manufacturing and Supply Agreement, referred to as the Kidney Care MSA. This narrow definition of "Other" represents a significant narrowing of that category compared to prior periods.

The Kidney Care MSA is also referenced in the context of the company's non-GAAP financial measures. The disclosure explains that both operational sales growth and organic sales growth — two non-GAAP metrics presented in Exhibit 99.1 — exclude the impact of the Kidney Care MSA as it is not reflected in the reportable segments. Analysts monitoring Baxter's sales trends under the new segment framework should factor this exclusion into their interpretation of the non-GAAP growth metrics provided in the recast tables.

Non-GAAP Measures: Operational and Organic Sales Growth Defined in the Recast

Exhibit 99.1 presents two non-GAAP measures: operational sales growth and organic sales growth. The disclosure defines operational sales growth as excluding the impact of the Kidney Care MSA not reflected in reportable segments, reflecting the previously announced exit of IV solutions in China within the MPT segment, and being calculated at constant currency rates. This measure is presented for the full year ended December 31, 2025 and each quarterly period within that year.

Organic sales growth is defined as excluding the impact of the Kidney Care MSA not reflected in reportable segments, impacts associated with business acquisitions or divestitures, and is also calculated at constant currency rates. This measure is presented for the quarterly period ended March 31, 2026. The company states that it believes these non-GAAP measures, when used alongside U.S. GAAP net sales figures, may provide a more complete understanding and facilitate fuller analysis of results, particularly when evaluating performance from one period to another. Constant currency rates are computed using current period local currency sales at prior period foreign exchange rates.

Furnishing Status of the Disclosure and Limitations on Incorporation by Reference

The disclosure makes an important distinction regarding the legal status of the information being provided. The filing states that the information furnished under Item 7.01, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 and is therefore not subject to the liabilities of that section. This is a standard Regulation FD furnishing, meaning the information is being made available to the public for informational purposes without triggering the same legal obligations as formally filed financial statements.

The company further clarifies that the information is not incorporated by reference into any of Baxter's filings under the Securities Act of 1933 or the Exchange Act, unless expressly set forth by specific reference in a subsequent filing. This legal framing is important for investors to understand: while the recast data is substantive and intended to aid comparability, it does not carry the same formal filing status as the consolidated financial statements published in Baxter's annual and quarterly reports. The disclosure was signed by Anita A. Zielinski, Interim Chief Financial Officer and Senior Vice President, Chief Accounting Officer and Controller.

Implications of the Two-Segment Structure for Future Earnings Reporting

With the new two-segment structure effective from Q2 2026, Baxter's upcoming quarterly earnings release for the period ended June 30, 2026, will be the first to reflect results under this reorganized framework in a primary reporting context. The company has indicated it intends to update comparative segment disclosures in future filings to reflect the new structure, consistent with the recast data now being furnished. This means that quarterly and annual comparisons in future reports will reference the recast historical figures rather than the previously published three-segment data.

The consolidation of the Pharmaceuticals segment into MPT, combined with the narrowed "Other" category and revised corporate cost allocation methodology, represents a meaningful shift in how analysts will need to assess Baxter's segment-level performance going forward. Investors may find the recast tables in Exhibit 99.1 essential reference material as Baxter begins reporting under the new two-segment operating model in its primary financial disclosures.