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January 7, 2019
Jay Saccaro
JP Morgan Healthcare Conference
Baxter Confidential — Do not distribute without prior approval | 2
Safe Harbor StatementThis 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 2018, 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, including by cyberattack; 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 operations 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.
Baxter Confidential — Do not distribute without prior approval | 3
Operating at the critical intersection where
innovations that save and sustain livesmeet the healthcare providers that make it happen
Baxter Confidential — Do not distribute without prior approval | 4
1Sales and related figures represent FY 2017; Other sales represent ~$0.5B. Totals may not foot due to rounding.Baxter Confidential — Do not distribute without prior approval 5
Americas 54%EMEA 26%Asia Pacific 20%
$10.6B
2017 Global Revenue
Baxter Profile: A Diversified And Global Portfolio1
Acute Therapies
~$0.5B
Advanced Surgery
~$0.7B
Clinical Nutrition
~$0.9B ~$2.7B
Medication Delivery
~$1.9B ~$3.5B
Renal CarePharmaceuticals
6
Strengthen our portfolio and extend our impact through transformative innovation that spans prevention to recovery
Our Strategy
Industry leading performance
Best place to workProduct safety and Quality
Growth through innovation
Baxter Confidential — Do not distribute without prior approval | 7
Prioritizing Patient Safety And Quality
Investing in quality systems and processes
Improving key quality metrics
Three warning letters closed
Strengthening relationships with global regulators
Building A Best Place To Work
Baxter Confidential — Do not distribute without prior approval | 8
A noted leader in corporate social responsibility
Recognized as an outstanding employer
Baxter Confidential — Do not distribute without prior approval | 9
Executing on pipeline opportunities and geographic expansion
Driving growth through evidence generation, physician education, and targeted market investments
Expanding beyond the core to unlock new therapies and markets
Multiple Avenues To Accelerate Growth
Market Development
EnterAdjacencies
PortfolioInnovation
Strengthening And Extending Our Impact
Culture of innovation with the right organization and talent in place
Resources aligned with high-growth opportunities
Accelerated pace of incremental and transformative innovation
Successful execution of commerciallaunches across business portfolio
1
2New product sales figures reflect guidance provided at May 21, 2018 Investor Conference. Graphic is intended as a visual representation.Baxter Confidential — Do not distribute without prior approval
All references to “new products” and “launches” in this presentation include new product launches, line extensions and geographic expansions, unless otherwise noted.10
Robust Pipeline Accelerating Growth1
New Products, New Indications, And Geographic Expansion Driving $1.7B In 2023 Sales2
New Product Launches Powered By:
200+ Launches In 2018-2023
11
20192018
Prismax
Spectrum IQ Infusion System Point of Care
New Pump Platform
Floseal Fast Prep
2020
Olimel N12
Baxter Confidential — Do not distribute without prior approval
Near-Term Launches Fueling Long-Term GrowthPipeline Highlights:
12|
Zero-Based OrganizationRightsizing organization with reduced spans and layers
Zero-Based SpendingEmploying disciplined cost assessment to eliminate waste
Portfolio ManagementOptimizing manufacturing footprint, R&D operations and supply chain network
Global Business ServicesCentralizing and streamlining support functions
Cumulative Savings vs. 2015
~$0.4B
~$0.9B~$1.1B ~$1.2B
2016 2018 2020 2023
Focused on sustainability of business
transformation initiatives1
2024+1Not to scale.
Baxter Confidential — Do not distribute without prior approval
Driving Operational Excellence Through Business Transformation
Baxter Confidential — Do not distribute without prior approval | 13
Delivering sustainable, profitable growth with a reinvigorated pipeline
Currently targeting ~35% dividend payout ratio of adjusted net income over time
Executing strategic acquisitions and collaborations to generate enhanced returns
Selective share repurchases to return value to shareholders
REINVEST IN BUSINESS DIVIDENDS M&ASHARE
REPURCHASE
Strategically Deploying Capital To Create Value For Shareholders
Baxter Confidential — Do not distribute without prior approval | 14
Drive Category Leadership
Rigorous Financial Criteria
Preserve InvestmentGrade Credit Rating
Capitalize On Core CapabilitiesM&A
Objectives
Disciplined Assessment Of Opportunities Considering Both Strategic Fit And Financial Criteria
Thoroughly Assessing Business Development Opportunities
FY 2018 FY 2020 FY 2023 FY 2018 FY 2020 FY 2023FY 2018 FY 2020 FY 2023
1
Baxter Confidential — Do not distribute without prior approval
See www.baxter.com for information regarding non-GAAP financial metrics used in this presentation, including constant currency sales, adjusted operating margin, adjusted diluted EPS, and free cash flow. 22018 figures reflect guidance provided in Q3 2018 Earnings Call (10/31/18); 2020 and 2023 figures reflect guidance provided in 2018 Investor Conference (5/21/18). 3Operating cash flow less capital expenditures. 15
Global Reported Revenue
Free Cash Flow3
Adjusted Diluted EPS
Adjusted Operating Margin
+600bps >10%
~$2.1B
~$2.65B
~$1.5B
>1.7x
20% - 21%
23% - 24%
17.3% $3.60-$3.75
$4.90-$5.05
$2.98-$3.00~5%
2018 – 2023 CAGRConstant Currency
5-year CAGR
Solid Long-Term Financial Outlook1,2
Baxter Confidential — Do not distribute without prior approval | 16
• 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