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Baxter International, Inc.$63.47($.37)(.58%)

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 Baxter Reports First-Quarter 2017 Results and Increases Financial Outlook for Full-Year 2017
   Wednesday, April 26, 2017 7:15:00 AM ET

--First-Quarter GAAP Earnings Per Share of $0.50; Adjusted Earnings of $0.58 per Share Increased 61 Percent

--Company Increases Full-Year 2017 Sales Growth Outlook to 1 to 2 Percent on a Reported Basis and 4 to 5 Percent on an Operational Basis

--Raises Full-Year 2017 GAAP EPS to $1.66 to $1.80; Adjusted EPS to $2.20 to $2.28

Baxter International Inc. (BAX ) today reported results for the first quarter of 2017 and increased its full-year 2017 guidance.

"Encouraged by a solid start to 2017 and the on-going momentum of our business transformation initiatives, we are raising our full-year sales and earnings outlook," said Jose (Joe) E. Almeida, chairman and chief executive officer. "We are driving growth through disciplined execution and particular strength across our U.S. businesses. We will continue to invest in evolving our portfolio through the introduction of innovative products and technologies along with geographic expansion to deliver future growth."

First-Quarter Financial Results

In the first quarter, worldwide sales totaled $2.5 billion, an increase of 4 percent on a reported basis and 5 percent on a constant currency basis as compared to the prior-year period. Operationally, Baxter’s sales rose 7 percent, which excludes the impact of foreign exchange, generic competition for U.S. cyclophosphamide and the previously communicated select strategic product exits the company is undertaking.

Sales within the U.S. were $1.1 billion, advancing 11 percent on a reported basis. International sales of $1.4 billion declined 1 percent on a reported basis and were comparable to the prior year on a constant currency basis. Baxter’s operational sales increased 13 percent in the U.S. and 2 percent internationally.

Global sales for Hospital Products totaled $1.6 billion in the first quarter, increasing 7 percent on both a reported and constant currency basis and advancing 10 percent operationally as compared to the prior-year period. Contributing to performance in the quarter were strong U.S. sales of IV therapies, IV access sets, and select anesthesia and critical care products along with favorable demand for parenteral nutrition therapies and international biosurgery products.

Baxter’s Renal sales totaled $896 million, comparable to the prior year on a reported basis and grew 1 percent globally on a constant currency basis. Operationally, global Renal sales advanced 2 percent benefitting from increased sales of peritoneal dialysis therapies driven by the continued adoption of the company’s newest Automated Peritoneal Dialysis (APD) cyclers - AMIA in the U.S. and HOMECHOICE CLARIA in international markets. Additionally, sales of Baxter’s acute renal care products advanced globally, reflecting growing demand for continuous renal replacement therapies (CRRT).

Baxter reported income from continuing operations of $273 million, or $0.50 per diluted share, on a GAAP (Generally Accepted Accounting Principles) basis for the first quarter. These results included special items totaling $62 million ($45 million net after-tax), primarily related to business optimization and intangible asset amortization.

On an adjusted basis, excluding special items, Baxter’s first quarter income from continuing operations totaled $318 million, or $0.58 per diluted share, exceeding the company’s previously issued guidance of $0.50 to $0.52 per diluted share.

Business Highlights

Baxter has recently achieved a number of operational, pipeline and commercial milestones in support of its strategy to drive accelerated growth and deliver meaningful innovation for patients and healthcare professionals around the world.

-- In Surgical Care: -- Introduced customer-centric enhancements to Baxter’s leading hemostatic agents, FLOSEAL and TISSEEL, designed to enhance patient safety and ease of use for clinicians.

-- Published two health economic data analyses in the Journal of Medical Economics supporting FLOSEAL as a cost-effective hemostat that may contribute to broader cost savings at hospitals as compared to other options.

-- Acquired Wound Care Technologies Incorporated, manufacturer of the DERMACLOSE Continuous Tissue Expander, an innovative wound closure technology that is complementary to Baxter’s surgical portfolio and directly leverages its existing expertise and channel strength.

-- In Integrated Pharmacy Solutions: -- Entered into an exclusive strategic partnership with Scinopharm, one of the world’s leading active pharmaceutical ingredient (API) manufacturers, to bring to market five generic injectables used in cancer treatments, with an option to add up to 15 additional injectable molecules.

-- In Renal: -- Surpassed 500,000 patient treatments administered globally utilizing Baxter’s SHARESOURCE Connectivity Platform. SHARESOURCE is the first and only two-way remote patient management system for home dialysis therapy and is available on both AMIA and HOMECHOICE CLARIA APD cyclers.

-- Successful deployment of PRISMAX, Baxter’s next generation continuous renal replacement therapy platform, in several European locations as part of an initial limited distribution prior to the planned full-scale launch in 2018.

Financial Outlook

-- For full-year 2017: Based on the company’s strong first quarter, Baxter is raising its financial outlook for the year. The company now expects sales growth of approximately 1 to 2 percent on a reported basis or 2 to 3 percent on a constant currency basis, and earnings from continuing operations, before special items, of $2.20 to $2.28 per diluted share for the full year. Adjusting for the impact of generic cyclophosphamide competition (an estimated one percent) and selected strategic product exits (an estimated one percent), Baxter expects underlying constant currency sales growth of approximately 4 to 5 percent. This guidance does not include any impact from the company’s proposed acquisition of Claris Injectables, which is expected to close in the second half of 2017.

-- For the second quarter: The company expects flat sales growth on a reported basis, or approximately 2 percent on a constant currency basis. Adjusting for the impact of generic cyclophosphamide competition (less than an estimated one-half percent) and selected strategic product exits (less than an estimated 1 percent), Baxter expects underlying constant currency sales growth of approximately 3 percent. The company expects earnings from continuing operations, before special items, of $0.55 to $0.57 per diluted share.

Please see the schedules accompanying this press release for a reconciliation between the projected 2017 adjusted earnings per diluted share and projected GAAP earnings per diluted share.

A webcast of Baxter’s first quarter conference call for investors can be accessed live from a link on the company’s website at www.baxter.com beginning at 7:30 a.m. CT on April 26, 2017. Please see www.baxter.com for more information regarding this and future investor events and webcasts.

Baxter provides a broad portfolio of essential renal and hospital products, including home, acute and in-center dialysis; sterile IV solutions; infusion systems and devices; parenteral nutrition; biosurgery products and anesthetics; and pharmacy automation, software and services. The company’s global footprint and the critical nature of its products and services play a key role in expanding access to healthcare in emerging and developed countries. Baxter’s employees worldwide are building upon the company’s rich heritage of medical breakthroughs to advance the next generation of healthcare innovations that enable patient care.

This release includes forward-looking statements concerning the company’s financial results, business development activities, capital structure, cost savings initiatives, R&D pipeline including results of clinical trials and planned product launches, and outlook for 2017. 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, and the impact of those products on quality or patient safety concerns; product development risks; product quality or patient safety concerns; future actions of regulatory bodies and other governmental authorities, including the FDA, the Department of Justice, the New York Attorney General and foreign counterparts; 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 proposed acquisition of Claris Injectables); fluctuations in supply and demand; the availability of acceptable raw materials and component supply; the inability to create timely production capacity or other manufacturing supply difficulties; the ability to achieve the intended results associated with the separation of the biopharmaceutical and medical products businesses; 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; fluctuations in foreign exchange and interest rates; any change in law concerning the taxation of income, including income earned outside the United States; actions taken by tax authorities in connection with ongoing tax audits; breaches or failures of the company’s information technology systems; 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 INTERNATIONAL INC.
                                                                              Consolidated Statements of Income
                                                                         Three Months Ended March 31, 2017 and 2016
                                                                                         (unaudited)
                                                                     (in millions, except per share and percentage data)
                                                               
                                                                                                                                                                        
                                                                                                         Three Months Ended
                                                                                                              March 31,
                                                                                   ---------------------------------------------------------------
                                                                                           2017                                      2016                                     Change
                                                                                   --------------------                      --------------------                      --------------------
                                                                                                                                                                        
NET SALES                                                                                        $2,475                                    $2,375                                        4%
                                                                                                                                                                        
COST OF SALES                                                                                     1,433                                     1,410                                        2%
                                                      
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
GROSS MARGIN                                                                   1,042                    965                     8%
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                    42.1%                                     40.6%                                   1.5 pts
                                                                                                                                                                        
MARKETING AND ADMINISTRATIVE EXPENSES                                                               570                                       641                                     (11%)
% of Net Sales                                                                                    23.0%                                     27.0%                                   (4 pts)
                                                                                                                                                                        
RESEARCH AND DEVELOPMENT EXPENSES                                                                   128                                       136                                      (6%)
% of Net Sales                                                                                     5.2%                                      5.7%                                 (0.5 pts)
                                                      
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
OPERATING INCOME                                                                 344                    188                    83%
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Net Sales                                                                                    13.9%                                      7.9%                                     6 pts
                                                                                                                                                                        
NET INTEREST EXPENSE                                                                                 14                                        28                                     (50%)
                                                                                                                                                                        
OTHER EXPENSE (INCOME), NET                                                                           2                                   (3,169)                                    (100%)
                                                      
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                            328                  3,329                  (90%)
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                        
INCOME TAX EXPENSE (BENEFIT)                                                      55                   (58)                 (195%)
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
% of Income from Continuing Operations before Income Taxes                                        16.8%                                    (1.7%)                                  18.5 pts
                                                                                                                                                                        
INCOME FROM CONTINUING OPERATIONS                                                                   273                                     3,387                                     (92%)
                                                                                                                                                                        
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX A                                                     (1)                                       (7)                                     (86%)
                                                                                                                                                                        
NET INCOME                                                                      $272                 $3,380                  (92%)
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                        
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
    Basic                                                                      $0.50                  $6.17                  (92%)
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                    $0.50                  $6.13                  (92%)
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                        
LOSS FROM DISCONTINUED OPERATIONS PER COMMON SHARE
    Basic                                                                      $0.00                ($0.01)                 (100%)
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                  ($0.01)                ($0.01)                     0%
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                        
NET INCOME PER COMMON SHARE
    Basic                                                                      $0.50                  $6.16                  (92%)
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
    Diluted                                                                    $0.49                  $6.12                  (92%)
============================================================= ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                        
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    Basic                                                                                           541                                       549
    Diluted                                                                      551                    552    
------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                        
ADJUSTED OPERATING INCOME (excluding special items)                                                $406           B                          $249           B                           63%
ADJUSTED PRE-TAX INCOME FROM CONTINUING OPERATIONS (excluding                                      $390           B                          $248           B                           57%
special items)
ADJUSTED INCOME FROM CONTINUING OPERATIONS (excluding special                                      $318           B                          $199           B                           60%
items)
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS (excluding                                        $0.58           B                         $0.36           B                           61%
special items)
                                                                                                                                                                        
A Operating results from Baxalta Incorporated
("Baxalta") are classified as discontinued operations for all
periods presented.
B Refer to page 9 for a description of the
adjustments and a reconciliation to GAAP measures.
                                                                                                                                                                              
                                                                                                                                                                              
                                                                                               BAXTER INTERNATIONAL INC.
                                                                                       Note to Consolidated Statements of Income
                                                                                      Three Months Ended March 31, 2017 and 2016
                                                                           Description of Adjustments and Reconciliation of GAAP to Non-GAAP
                                                                                                       Measures
                                                                                                      (unaudited)
                                                                                  (in millions, except per share and percentage data)
                                                                                                                     
The company’s GAAP results for the three months ended March 31, 2017
and 2016 included special items which impacted the GAAP measures as
follows:
 
                                                                                                                                       Three Months Ended
                                                                                                                                            March 31,
                                                                                                                    ------------------------------------------------------
                                                                                                                           2017                                   2016                                   Change
                                                                                                                    -----------------                      -----------------                      --------------------
Gross Margin                                                                                                                   $1,042                                   $965                                        8%
                                        Intangible asset amortization expense(1)                                                   38                                     40
                                        Business optimization items (2)                                                            16                                     12
                                        Product-related items(4)                                                                    -                (12)    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Gross Margin                                                                                                          $1,096              $1,005                     9%
                                                                                                                    ================= ==================== ================= ==================== ====================
% of Net Sales                                                                                                                  44.3%                                  42.3%                                     2 pts
                                                                                                                                                                                                   
Marketing and Administrative Expenses                                                                                            $570                                   $641                                     (11%)
                                        Business optimization items(2)                                                           (15)                                    (3)
                                        Baxalta separation-related costs(3)                                                       (7)                                   (18)
                                        Historical rebate and discount adjustments(5)                                              12                   -    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Marketing and Administrative Expenses                                                                                   $560                $620                  (10%)
                                                                                                                    ================= ==================== ================= ==================== ====================
% of Net Sales                                                                                                                  22.6%                                  26.1%                                 (3.5 pts)
                                                                                                                                                                                                   
Research and Development Expenses                                                                                                $128                                   $136                                      (6%)
                                        Business optimization items (2)                                                             2                   -    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Research and Development Expenses                                                                                       $130                $136                   (4%)
                                                                                                                    ================= ==================== ================= ==================== ====================
% of Net Sales                                                                                                                   5.3%                                   5.7%                                 (0.4 pts)
                                                                                                                                                                                                   
Operating Income                                                                                                                 $344                                   $188                                       83%
                                        Impact of special items                                                                    62                  61    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Operating Income                                                                                                        $406                $249                    63%
                                                                                                                    ================= ==================== ================= ==================== ====================
% of Net Sales                                                                                                                  16.4%                                  10.5%                                   5.9 pts
                                                                                                                                                                                                   
Other Expense (Income), Net                                                                                                        $2                               $(3,169)                                    (100%)
                                        Net realized gains on Retained Shares transactions (6)                                      -                                  3,243
                                        Loss on debt extinguishment (7)                                                             -               (101)    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Other Expense (Income), Net                                                                                               $2               $(27)                 (107%)
                                                                                                                    ================= ==================== ================= ==================== ====================
                                                                                                                                                                                                   
Pre-Tax Income from Continuing Operations                                                                                        $328                                 $3,329                                     (90%)
                                        Impact of special items                                                                    62             (3,081)    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Pre-Tax Income from Continuing Operations                                                                               $390                $248                    57%
                                                                                                                    ================= ==================== ================= ==================== ====================
                                                                                                                                                                                                   
Income Tax Expense (Benefit)                                                                                                      $55                                  $(58)                                    (195%)
                                        Impact of special items                                                                    17                 107    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Income Tax Expense                                                                                                       $72                 $49                    47%
                                                                                                                    ================= ==================== ================= ==================== ====================
% of Adjusted Pre-Tax Income from Continuing Operations                                                                         18.5%                                  19.8%                                 (1.3 pts)
                                                                                                                                                                                                   
Income from Continuing Operations                                                                                                $273                                 $3,387                                     (92%)
                                        Impact of special items                                                                    45             (3,188)    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Income from Continuing Operations                                                                                       $318                $199                    60%
                                                                                                                    ================= ==================== ================= ==================== ====================
                                                                                                                                                                                                   
Diluted EPS from Continuing Operations                                                                                          $0.50                                  $6.13                                     (92%)
                                        Impact of special items                                                                  0.08              (5.77)    
                                                                                                                    ----------------- -------------------- ----------------- -------------------- --------------------
Adjusted Diluted EPS from Continuing Operations                                                                                 $0.58               $0.36                    61%
                                                                                                                    ================= ==================== ================= ==================== ====================
                                                                                                                                                                                                   
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
    Diluted                                                                                                    551                 552    
------------------------------------------------------------------------------------------------------------------- ----------------- -------------------- ----------------- -------------------- --------------------
                                                                                                                                                                                                   
(1)                                     The company’s results in 2017 and 2016 included intangible asset
                                        amortization expense of $38 million ($28 million, or $0.05 per
                                        diluted share, on an after-tax basis) and $40 million ($29 million,
                                        or $0.05 per diluted share, on an after-tax basis), respectively.
                                         
(2)                                     The company’s results in 2017 included a net charge of $29 million
                                        ($21 million, or $0.04 per diluted share, on an after-tax basis)
                                        related to business optimization initiatives. This included a net
                                        charge of $3 million related to restructuring activities, $21
                                        million of costs to implement business optimization programs which
                                        primarily included external consulting and project employee costs,
                                        and $5 million of accelerated depreciation associated with
                                        facilities to be closed. The $3 million of net restructuring charges
                                        ($2 million, or $0.00 per diluted share, on an after-tax basis)
                                        included net $2 million of employee termination costs and $1 million
                                        related to contract termination costs.
                                         
                                        The company’s results in 2016 included a net charge of $15 million
                                        ($10 million, or $0.02 per diluted share, on an after-tax basis)
                                        related to business optimization initiatives. This included a net
                                        charge of $4 million related to restructuring activities, $4 million
                                        of costs to implement business optimization programs which primarily
                                        included external consulting fees, and $7 million of Gambro
                                        integration costs. The $4 million of net restructuring charges ($2
                                        million, or $0.00 per diluted share, on an after-tax basis) related
                                        to employee termination costs.
                                         
(3)                                     The company’s results in 2017 and 2016 included costs incurred
                                        related to the Baxalta separation totaling $7 million ($5 million,
                                        or $0.01 per diluted share, on an after-tax basis) and $18 million
                                        ($12 million, or $0.02 per diluted share, on an after-tax basis),
                                        respectively.
                                         
(4)                                     The company’s results in 2016 included a benefit of $12 million ($7
                                        million, or $0.01 per diluted share, on an after-tax basis) related
                                        to an adjustment to the SIGMA SPECTRUM infusion pump reserves.
                                         
(5)                                     The company’s results in 2017 included a benefit of $12 million ($9
                                        million, or $0.02 per diluted share, on an after-tax basis) related
                                        to an adjustment to the company’s historical rebates and discount
                                        reserves.
                                         
(6)                                     The company’s results in 2016 included net realized gains of $3.2
                                        billion ($3.3 billion, or $5.97 per diluted share, on an after-tax
                                        basis), related to the debt-for-equity exchanges of the company’s
                                        retained shares in Baxalta for certain company indebtedness
                                        (together the "Retained Shares transactions"). A tax benefit of $54
                                        million was recognized as a result of the Retained Shares
                                        transactions.
                                         
(7)                                     The company’s results in 2016 included a net debt extinguishment
                                        loss totaling $101 million ($65 million, or $0.12 per diluted
                                        share, on an after-tax basis) related to the March 2016
                                        debt-for-equity exchange for certain company indebtedness in a
                                        Retained Shares transaction.
                                                                                                                                                                                                   
For more information on the company’s use of non-GAAP financial
measures in this press release, please see the company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission
on the date of this press release.
 
 
                                                                                                                                                                         BAXTER INTERNATIONAL INC.
                                                                                                                                                                                 Net Sales
                                                                                                                                                                  Periods Ending March 31, 2017 and 2016
                                                                                                                                                                                (unaudited)
                                                                                                                                                                              ($ in millions)
                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                        Q1                       Q1               % Growth @               % Growth @
                                   2017                     2016             Actual Rates           Constant Rates
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Renal
United States                                                                                                                                                           $216                                                           $201                                                             7%                                                             7%
International                                          680                      697                     (2%)                     (1%)
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal                                           $896                     $898                     (0%)                       1%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
United States                                                                                                                                                           $887                                                           $791                                                            12%                                                            12%
International                                          692                      686                       1%                       2%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                             $1,579                   $1,477                       7%                       7%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                      
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Baxter International Inc.
United States                                                                                                                                                         $1,103                                                           $992                                                            11%                                                            11%
International                                        1,372                    1,383                     (1%)                       0%
------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                        $2,475                   $2,375                       4%                       5%
========================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
 
 
                                                                                                                                                                      BAXTER INTERNATIONAL INC.
                                                                                                                                                                         Sales by Franchise
                                                                                                                                                               Periods Ending March 31, 2017 and 2016
                                                                                                                                                                             (unaudited)
                                                                                                                                                                           ($ in millions)
                                 
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                   Q1                       Q1               % Growth @               % Growth @
                              2017                     2016             Actual Rates           Constant Rates
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                 
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal (1)                                                     $896                     $898                     (0%)                       1%
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                 
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
Fluid Systems (2)                                                                                                                                                  $585                                                           $524                                                            12%                                                            12%
Integrated Pharmacy Solutions (3)                                                                                                                                   552                                                            556                                                           (1%)                                                             0%
Surgical Care (4)                                                                                                                                                   334                                                            305                                                            10%                                                            10%
Other (5)                                                            108                       92                      17%                      18%
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                                           $1,579                   $1,477                       7%                       7%
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                 
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                                      $2,475                   $2,375                       4%                       5%
============================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
(1)   Includes sales of the company’s peritoneal dialysis, hemodialysis
                         and continuous renal replacement therapies.
                          
(2)                      Includes sales of the company’s IV therapies, infusion pumps and
                         administration sets.
                          
(3)                      Includes sales of the company’s premixed and oncology drug
                         platforms, nutrition products and pharmacy compounding services.
                          
(4)                      Includes sales of the company’s inhaled anesthesia products as well
                         as biological products and medical devices used in surgical
                         procedures for hemostasis, tissue sealing and adhesion prevention.
                          
(5)                      Includes sales primarily from the company’s pharmaceutical
                         partnering business.
 
 
                                                                                                                                                                                                                                     BAXTER INTERNATIONAL INC.
                                                                                                                                                                                                                                     Franchise Sales by U.S. and International
                                                                                                                                                                                                                                     Periods Ending March 31, 2017 and 2016
                                                                                                                                                                                                                                     (unaudited)
                                                                                                                                                                                                                                     ($ in millions)
                                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                     Q1 2017                                                                                                        Q1 2016                                                                                                       % Growth
                                                                                             ----------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- ----------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- ---------------------------------------------------------------------------------------------------------
                                 U.S.          International                  Total                       U.S.          International                  Total                       U.S.          International                  Total
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal                                         $216                   $680                   $896                       $201                   $697                   $898                         7%                   (2%)                     0%
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products                                                                                                                                                                                                                                                                           
Fluid Systems                                                                                                $359                                      $226                                      $585                                                                                $298                                      $226                                      $524                                                                                 20%                                        0%                                       12%
Integrated Pharmacy Solutions                                                                                 266                                       286                                       552                                                                                 264                                       292                                       556                                                                                  1%                                      (2%)                                      (1%)
Surgical Care                                                                                                 202                                       132                                       334                                                                                 181                                       124                                       305                                                                                 12%                                        6%                                       10%
Other                                                 60                     48                    108                         48                     44                     92                        25%                     9%                    17%
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                             $887                   $692                 $1,579                       $791                   $686                 $1,477                        12%                     1%                     7%
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Baxter                                      $1,103                 $1,372                 $2,475                       $992                 $1,383                 $2,375                        11%                   (1%)                     4%
============================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
 
 
                                                                                                            BAXTER INTERNATIONAL INC.
                                                                                                          Free Cash Flow Reconciliation
                                                                                                                   (unaudited)
                                                                                                                 ($ in millions)
                               
------------------------- ------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                            Three Months Ended
                                                                                                                                                                                                   March 31,
                                                                                                                                                             ------------------------------------------------------------------------------------
                                2017                     2016
------------------------- ------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Cash flows from operations - continuing operations                            $206                   ($174)
------------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
    Capital expenditures                                                     (123)                    (184)
------------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Free cash flow - continuing operations                                         $83                   ($358)
======================================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
 
 
                                                                                                                                                                           BAXTER INTERNATIONAL INC.
                                                                                                                                                                 Reconciliation of Non-GAAP Financial Measure
                                                                                                                                                             Change in Net Sales As Reported to Operational Sales
                                                                                                                                                        From The Three Months Ended March 31, 2016 to The Three Months
                                                                                                                                                                             Ended March 31, 2017
                                                                                                                                                                                  (unaudited)
                                                                                                                                       
                                                                                                                                                            
                                                                                                                                       -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                     Q1 2017
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                  Net sales                                        US                                   Product                                                                                                                   Operational
                              As Reported       Cyclophosphamide                  Exits                       FX                    Sales
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Renal                                               0%                     0%                     1%                       1%                       2%
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Hospital Products
Fluid Systems                                                                                                                                           12%                                        0%                                        1%                                                             0%                                                            13%
Integrated Pharmacy Solutions                                                                                                                           -1%                                        3%                                        1%                                                             1%                                                             4%
Surgical Care                                                                                                                                           10%                                        0%                                        1%                                                             0%                                                            11%
Other                                                    17%                     0%                     0%                       1%                      18%
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total Hospital Products                                   7%                     2%                     1%                       0%                      10%
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                          
----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Baxter International Inc.
United States                                                                                                                                           11%                                        2%                                        0%                                                             0%                                                            13%
International                                                                                                                                           -1%                                        0%                                        2%                                                             1%                                                             2%
Total Baxter                                              4%                     1%                     1%                       1%                       7%
============================= ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
 
 
                                                                                                                                           BAXTER INTERNATIONAL INC.
                                                                                                                                 Reconciliation of Non-GAAP Financial Measure
                                                                                                                         Projected 2017 Adjusted Earnings Per Share and Projected GAAP
                                                                                                                                              Earnings Per Share
                                                                                                                                                  (unaudited)
                                                                                           
                                                       
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
2017 Earnings Per Share Guidance                                    Q2 2017                        FY 2017
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Earnings per Diluted Share - Adjusted               $0.55 - $0.57                  $2.20 - $2.28
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Estimated intangible asset amortization                              $0.05                          $0.20
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Estimated business optimization charges                          $0.15 - $0.18                  $0.27 - $0.33
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Estimated Baxalta separation-related expenses                        $0.01                          $0.02
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Historical rebate and discount adjustments                             -                           ($0.01)
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Earnings per Diluted Share - GAAP                                $0.31 - $0.36                  $1.66 - $1.80
-------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                           

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170426005688r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170426005688/en/

SOURCE: Baxter International Inc.

Baxter International Inc. 
Media Contact: 
Bill Rader, (224) 948-5353 
media@baxter.com 
or 
Investor Contact: 
Clare Trachtman, (224) 948-3085


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