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Healthcare

Baxter International

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Market Data

Financials

XBRL · SEC EDGAR

2013–2025(13yr)

Revenue

Net Income

Free CF

Metric	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$9.4B	$10.7B	$10.0B	$10.2B	$10.6B	$11.1B	$11.4B	$11.7B	$12.8B	$15.1B	$14.8B	$10.6B	$11.2B	+5.7%
Gross Profit	$7.6B	$8.2B	$4.1B	$4.1B	$4.5B	$4.8B	$4.8B	$4.6B	$5.1B	$5.4B	$5.0B	$4.0B	$3.4B	-15.2%
Gross Margin	80.7%	76.1%	41.6%	40.4%	42.2%	43.0%	41.9%	39.3%	39.9%	35.7%	33.6%	37.5%	30.1%	-7.4pp
Operating Income	$496.0M	$656.0M	$449.0M	$724.0M	$1.3B	$1.6B	$1.8B	$1.6B	$1.7B	-$1.9B	$390.0M	$14.0M	-$308.0M	-2300.0%
Operating Margin	5.3%	6.1%	4.5%	7.1%	11.9%	14.4%	15.6%	13.8%	13.4%	-12.9%	2.6%	0.1%	-2.7%	-2.9pp
Net Income	$2.0B	$2.5B	$968.0M	$5.0B	$717.0M	$1.6B	$1.0B	$1.1B	$1.3B	-$2.4B	$2.7B	-$649.0M	-$957.0M	-47.5%
Net Margin	21.4%	23.3%	9.7%	48.9%	6.8%	14.6%	8.8%	9.4%	10.0%	-16.1%	17.9%	-6.1%	-8.5%	-2.4pp
Free Cash Flow	$1.7B	$1.3B	$736.0M	$935.0M	$1.2B	$1.4B	$1.4B	$1.2B	$1.5B	$532.0M	$1.0B	$573.0M	$332.0M	-42.1%
FCF Margin	17.8%	12.3%	7.4%	9.2%	11.4%	12.7%	12.4%	9.9%	11.6%	3.5%	7.0%	5.4%	3.0%	-2.4pp
EPS (Diluted)	$3.66	$4.56	$1.76	$9.01	$1.29	$2.97	$1.93	$2.13	$2.53	$-4.83	$5.25	$-1.27	$-1.87	-47.2%

Total Debt$9.4B

Cash & Equiv.$2.0B

Net Debt$7.5B

3 min read

1. THE BIG PICTURE

Baxter International is a company in the midst of a painful identity shift, attempting to transition from a broad healthcare conglomerate to a "nimble" organization while carrying a massive $9.48 billion debt burden (Risks). This transformation is complicated by a $1.035 billion net loss in the most recent quarter and a product portfolio that currently ranks last among its peers in every major financial efficiency metric, from gross margin to free cash flow (Peer Benchmarking).

2. WHERE THE RISKS HIT HARDEST

Baxter’s "breadth and depth" of products (Business) is directly threatened by its $9.48 billion debt load because the required interest payments reduce the capital available for the R&DR&DResearch & Development — spending on creating new products or technologies necessary to maintain that portfolio (Risks). Furthermore, the strategic goal of achieving "clinical differentiation" through new connected care offerings (Competitive Position) is undermined by the voluntary ship and installation hold on the Novum LVP, which has already suppressed sales in the Medical Products segment (Recent Results). Finally, the "operational efficiencies" Baxter claims to derive from shared manufacturing (Business) are being eroded by "stranded costs" following the divestiture of its Kidney Care business, creating a complexity that may prevent Baxter International from reaching its financial targets (Risks).

3. WHAT THE NUMBERS SAY TOGETHER

While Baxter reported an 8% sales increase in the fourth quarter of 2025, its outlook for 2026—projecting flat to 1% growth—suggests this momentum is temporary (Recent Results). The peer data reveals a stark structural reality: Baxter’s 34.1% gross margin is the lowest in its group—less than half of Zimmer Biomet’s 71.3%—reflecting a heavy reliance on lower-margin physical medical supplies and IV solutions rather than high-margin specialized devices (Peer Benchmarking).

The market’s lack of confidence is visible in the supplemental data: short interest stands at a high 12.5% of the float (Supplemental Signals). The divergence between the recent 8% growth and the "flat" 2026 guidance is explained by the Novum IQ LVP shipment hold and the loss of revenue scale following the Kidney Care sale (Risks, Recent Results).

4. IS IT WORTH IT AT THIS PRICE?

At 8.5x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Baxter trades at a significant discount to the peer median of 20.1x (Peer Benchmarking). This valuation reflects Baxter International's -3.1% net margin and a 2.2% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin that is the lowest among its competitors. At this multiple, the market is pricing in a long-term growth rate of just 0.5% (Computed Valuation Context).

This low bar is justified by Baxter International's current financial state; Baxter is losing money on a GAAPGAAPGenerally Accepted Accounting Principles — the standard U.S. accounting rules all public companies must follow basis and faces a net leverage ratio of 35.9x when compared to its $0.2 billion in annual free cash flow (Computed Valuation Context). For this price to be "right," the new "Baxter Growth and Performance system" must successfully decentralize the business and eliminate the stranded costs from recent divestitures—tasks that have not yet yielded positive net earnings.

5. WHAT WOULD CHANGE THIS VIEW?

Constructive if the Novum LVP ship hold is lifted, leading to a measurable rebound in Medical Products & Therapies sales and market share.
Cautious if net leverage targets are missed by the end of 2026, which management notes could trigger credit rating downgrades (Risks).
Constructive if the new operating model leads to a sequential expansion in operating margins toward the peer median of 15.7% (Peer Benchmarking).

6. BOTTOM LINE

Structural Advantage: Entrenched relationships with hospitals and clinics that rely on the "critical nature" of Baxter’s global IV solution and surgical infrastructure.

Bottom Line: Baxter is a high-leverage turnaround play where a deep valuation discount is currently neutralized by bottom-tier margins and significant regulatory hurdles.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Indebtedness: As of December 31, 2025, Baxter International held approximately $9.48 billion in debt. This leverage requires substantial cash flow for debt service, reducing funds available for R&DR&DResearch & Development — spending on creating new products or technologies, capital expenditures, and share repurchases, and potentially triggering credit rating downgrades if net leverage targets are not met by the end of 2026.
Strategic Transformation: The divestiture of the Kidney Care business and the acquisition of Hillrom have resulted in a smaller, more concentrated business model. This transition has led to significant stranded costs that Baxter International may not be able to fully offset, as well as potential disputes with buyers and integration challenges that could negatively impact operating results.
Supply Chain and Manufacturing: Baxter International is vulnerable to production delays and raw material shortages, exacerbated by events like Hurricane Helene. Baxter International’s reliance on single-source suppliers and specific manufacturing facilities creates a risk of lost revenue if these sites face closure or disruption.
Product Quality and Regulatory Compliance: Baxter International has experienced quality management issues, specifically the voluntary ship and installation hold for the Novum LVP in the U.S. and Canada. Such incidents can lead to product recalls, warning letters, and monetary sanctions, which damage customer confidence and market share.
Market Competition and Pricing: Baxter International faces intense competition focused on cost-effectiveness and technological innovation. Consolidation among GPOs and IDNs has increased pressure for price concessions, which, combined with declining demand in certain segments like IV solutions, threatens to compress margins.

2. Company-Specific Risks

Dividend Policy: Following the reduction of the quarterly dividend to $0.01 per share in November 2025, there is no guarantee of future increases or continued payments, which may negatively affect the market price of common stock.
Management Transition: The election of Andrew Hider as President and CEO in July 2025, alongside other leadership changes, creates uncertainty regarding the successful execution of strategic objectives and the retention of key personnel.
Unionized Workforce: A portion of the workforce is unionized, with collective bargaining agreements at certain U.S. manufacturing facilities scheduled to expire in January 2027 and January 2029, posing a risk of labor disruptions.
Climate Change Impacts: Physical risks from climate change, such as water scarcity and extreme weather, threaten manufacturing facilities and increase the cost of raw materials like resins, as well as risk insurance premiums.

3. Regulatory/Legal Risks

Healthcare Reform: The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act impose pricing pressures through comparative effectiveness research and expanded Medicaid rebates.
Anti-Corruption and Trade Laws: Baxter International is subject to the U.S. Foreign Corrupt Practices Act (FCPA) and various global anti-bribery laws. Violations, even by individual employees, can result in large civil and criminal penalties and exclusion from government programs.
Data Privacy and Cybersecurity: Baxter International must comply with complex global frameworks including HIPAA, the CCPA, the GDPR, and the EU Artificial Intelligence Act. Failure to protect protected health information or manage AI-related risks can lead to material regulatory fines and litigation.
Environmental Regulations: Jurisdictions are increasingly restricting the use of chemicals such as DEHP, polyvinyl chloride, and PFAS. The EEA’s restriction on desflurane by 2026 specifically impacts Baxter International’s anesthesia portfolio.

4. Financial Impact Map

Significant Indebtedness → Cash Flow / R&D Investment → $9.48 billion in debt requires substantial debt service, constraining capital for R&DR&DResearch & Development — spending on creating new products or technologies and growth.

Strategic Divestitures/Acquisitions → Operating Expenses → Stranded costs from the Kidney Care separation and integration expenses from Hillrom continue to impact the cost structure.

Supply Chain Disruptions → Net Sales → Inability to satisfy demand for key products due to raw material shortages or facility closures directly reduces revenue.

Product Quality Issues (Novum LVP) → Inventory / Operating Results → Voluntary ship and installation holds restrict the ability to realize returns on inventory and capital investments.

Pricing Pressures/GPO Consolidation → Gross Margin → Increased discounting and most-favored-nation clauses requested by IDNs and GPOs exert downward pressure on product pricing.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-K	Feb 2026	Dec 2025
10-Q	Nov 2025	Sep 2025
14A	Mar 2025	—