Baxter International Inc.

Good morning, ladies and gentlemen, and welcome to Baxter International's third quarter 2026 earnings conference call. Your lines will remain in a listen-only mode until the question and answer segments of today's call. At that time, if you have a question, you will need to press star 1 on your touchtone phone. If anyone should require assistance during the conference, please press star, then 0 on your touchtone phone. As a reminder, this call is being recorded by Baxter and is copyrighted material. Mr. Moran, you may begin. Good morning and welcome. Today we'll discuss Baxter's third quarter results along with our updated financial outlook for the full year 2026.

This morning, a press release was issued with our preliminary earnings results and updated outlook. The press release and investor presentation are available on the investor section of the Baxter website. Joining me today are Andrew Hider, President and Chief Executive Officer, and John Rogers, Executive Vice President and Chief Financial Officer. During the call, we will be making forward-looking statements, including... Comments regarding our updated financial outlook for the full year 2026 and the anticipated drivers of the fourth quarter The anticipated impact of various regulatory, operational, and quality matters, including ones related to our infusion pump platform and ongoing supply challenges And commentary regarding the global macroeconomic environment, including tariff impacts and the broader inflationary pressures forward-looking statements involve risks and uncertainties which could cause our actual results to differ materially from our current expectations please refer to today's press release the forward-looking statement slide at the beginning of our investor presentation and our SEC filings for more detail in addition please note on the call all of our comments will be on a non-GAAP basis unless they are specifically called out as GAAP Non-GAAP financial measures are used to help investors understand Baxter's ongoing business performance. GAAP to non-GAAP reconciliations can be found in the schedules attached to our press release and our earnings presentation. On the call, we will reference organic growth, which excludes the impact of foreign exchange, MSA revenues from Vantiv, and impacts associated with business acquisitions or divestitures. Unless otherwise noted, all financial results on today's call reflect continuing operations and exclude Baxter's former kidney care business, which is reported as discontinued operations. Finally, Andrew, John, and I will take questions following the prepared remarks, and we kindly ask that you limit yourself to one question and one brief follow-up so that we can give as many people in the queue an opportunity. With that, I'd like to turn the call over to Andrew.

Thank you, Kevin, and good morning, everyone. Before discussing the quarter, I want to welcome John Rogers to Baxter as our new Chief Financial Officer. John joined us on October 1st and has a strong track record of leading multiple complex organizations through transformation and performance improvement. His deep financial and operational experience aligns well with our strategic priorities, and I look forward to partnering with him as we continue to advance our turnaround. Now I will turn to the quarter. Our third quarter performance provides further evidence that our turnaround is gaining traction. We continue to advance our strategic priorities and delivered results ahead of our expectations. As a result, we have greater confidence in the full year and are raising our outlook for both organic sales growth and adjusted earnings per share. As I said last quarter, I am encouraged by the steady progress we are making We have a lot of work ahead of us to realize the full potential of Baxter. We are focused on executing in the fourth quarter and finishing the year strong while continuing to improve our say-do ratio and deliver more consistent performance. All of these efforts support our objective to create long-term shareholder value. With that, let me turn to a few highlights from the quarter. Third quarter global sales totaled approximately $3 billion, an increase of 5% on both a reported and organic basis. We saw broad base growth with every division contributing in both segments growing across the U.S. and international markets. Advanced surgery, drug compounding, and infusion systems were the largest contributors in the quarter. Adjusted earnings were $0.58 for diluted share. While this exceeded our expectations, it represents an expected year-over-year decline due to the discrete tax benefits recognized in the prior year. And market demand remained generally steady during the quarter, with continued strength in advanced surgery and a healthy order book in Care and Connectivity Solutions, or CCS. We continue to closely monitor the external environment, including macroeconomic uncertainty. We are raising our full-year outlook for organic sales growth to a range of 3% to 4%, from 2% to 3%. We are also raising the bottom end of our outlook for adjusted earnings per diluted share to $2.05 to $2.15, compared with our previous range of $1.95 to $2.15. Throughout the year, we have communicated a consistent framework for 2026, known mechanical headwinds and more difficult comparisons in the first half, followed by improved performance in the second half. Our third quarter results are a meaningful proof point that performance is progressing in line with that framework. Let me now turn to the progress we are making against our three strategic priorities, stabilizing the business, strengthening the balance sheet, and embedding continuous improvement across Baxter. Our first priority, stabilizing the business. For example, in our CCS business, an on-time shipment metric improved 8% year over year. Additionally, our advanced surgery business improved the quality measure by nearly 20% year over year. We are encouraged by this progress, while recognizing there is more work to do to drive greater consistency across our portfolio and manufacturing operations. To that end, we have made the decision to discontinue production of Cephalos foreign products, which are currently manufactured at a Round Lake, Illinois specialty injectable facility. Importantly, this action is not expected to create a market shortage for these products. and by repositioning the facility exclusively for non-SEF production, we will simplify and streamline our operations while supporting supply continuity of the non-SEF portfolio. An additional benefit of this action is that it helps address some of the complexities referenced in the recent FDA warning letter we received related to an inspection conducted at the Round Lake facility earlier this year. Thank you for joining us. Product quality, patient safety, and supply reliability are top priorities and we are committed to addressing the observations and working closely with the FDA throughout the process. Our second strategic priority is strengthening the balance sheet and we have made clear progress in the third quarter. Free cash flow was strong at $448 million in the quarter. and many more. Thank you for watching. Our third strategic priority. Embedding continuous improvement across Baxter. Baxter GPS is becoming increasingly integrated into how we operate, strengthening productivity, execution, discipline, and accountability. Year to date, we have completed more than 700 continuous improvement initiatives across Baxter. These events targeted all value creators. We have more than 200 currently in flight and approximately 350 additional initiatives planned. Let me give you a few recent examples of where our teams are applying Baxter GPS to improve both commercial execution and performance. In frontline care, teams improve blood pressure cuff manufacturing cycle times by more than 10%, expanding production capacity without additional capital investment. In our advanced surgery business, we have held events focused on strengthening inventory management and improving cash conversion. Across our global services teams, Baxter GPS is driving measurable improvements in execution and customer service. Thank you for watching. will come from the accumulation of repeatable improvements that translate into better operating and financial performance over time. Innovation is another important element of our strategy and is essential to sustaining portfolio growth and strengthening Baxter's competitive position. Thank you for joining us. These offerings enhance our portfolio and expand our ability to deliver differentiated solutions to customers. In summary, our third quarter results provide further evidence that Baxter is moving in the right direction. We exceeded our expectations for sales, adjusted earnings, and free cash flow and increased our full year outlook. At the same time, Thank you for joining us. I will now turn the call over to John to provide more detail on our third quarter results, including segment level performance and our updated 2026 guidance. John, over to you.