Baxter International (BAX) investor relations material

Strategic transformation and cultural change

• Implemented Baxter GPS (Growth and Performance System) to align all divisions on eight key value creators, including revenue, margin, free cash flow, and ROIC.

• Shifted to a decentralized management structure, empowering business units with P&L responsibility to drive change and accountability.

• Enhanced bonus and incentive structures to align nearly 100% of staff objectives with business performance, rolled out in Q1.

• Leadership emphasizes a high say-do ratio and continuous improvement, with senior staff actively participating in Kaizen events.

• Culture change is ongoing, with early progress shown by 231 GPS events in Q1 and increased team engagement.

Portfolio strategy and business focus

• Major portfolio shifts, including the kidney care business spin-off, are largely complete, stabilizing the business.

• Businesses are categorized into invest and grow, sustain, and fix/divest, with Advanced Surgery highlighted as a growth area.

• IV solutions and pharma businesses are positioned for sustaining strong market share and operational efficiency.

• Portfolio will continue to evolve, with ongoing customer insight and market analysis guiding future changes.

Financial performance and outlook

• Q1 performance exceeded expectations, attributed to improved execution and accountability measures.

• Free cash flow improvement is a key focus, with action plans targeting collections, supplier payments, and inventory management.

• Margin improvement in the second half of the year is expected from higher volumes, cost structure actions, and cycling through higher-cost inventory.

• Full-year guidance was reaffirmed, with proactive management of inflation, supply chain, and cost pressures.