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DISCONTINUED OPERATIONS | 12 Months Ended
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Dec. 31, 2024
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. The consolidated financial statements reflect discontinued operations for two strategic actions, as described below. Discontinued Operations - Kidney Care On August 12, 2024, we entered into an EPA to sell our Kidney Care business, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions. That business, which is comprised of our former Kidney Care segment, provides chronic and acute dialysis therapies and services, including peritoneal dialysis, hemodialysis, continuous renal replacement therapies, and other organ support therapies. On January 31, 2025, we completed the sale of our Kidney Care business to Carlyle for an aggregate purchase price of $3.80 billion in cash, subject to certain closing cash, working capital and debt adjustments. After giving effect to certain adjustments, we received approximately $3.71 billion pre-tax cash proceeds at closing of the transaction with the net after tax proceeds currently estimated to be approximately $3.4 billion, subject to certain post-closing adjustments. We concluded that our Kidney Care business met the criteria to be classified as held-for-sale in August 2024. We analyzed the quantitative and qualitative factors relevant to the sale of our Kidney Care business, including its significance to our overall net income (loss), earnings (loss) per share, and net assets, and determined that those conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation. The fair value and carrying value of assets held for sale are evaluated each period and a loss on sale is recognized when the fair value less costs to sell are below the carrying value. There has been no loss on sale recognized for the period ending December 31, 2024. We will recognize a gain or loss upon disposition of the business depending on the carrying value at that date, including any tax impacts of the sale, which may be material. Upon closing of the sale of the Kidney Care business, Baxter and Vantive entered into several agreements, including a Manufacturing and Supply Agreement (Kidney Care MSA), a long-term Master Services Agreement, a Distribution Agreement, a Transition Services Agreement (Kidney Care TSA), and an Intellectual Property Agreement. Pursuant to the Kidney Care MSA, Baxter and the Kidney Care divested entities will provide each other with certain dialysis-related products, other products, product components and fulfillment services for a period up to 10 years post-closing (with certain extension rights as provided therein). Pursuant to the Kidney Care TSA, Baxter and the entities that will be divested in connection with the Kidney Care sale (the Kidney Care divested entities) will provide each other, on an interim basis, certain transitional services for up to 30 months post-closing (with certain extension rights as provided therein) to help ensure business continuity and help minimize disruptions to the entities' operations post-closing. Services to be provided under the Kidney Care TSA include information technology applications and support, supply chain and certain other corporate and administrative services. Pursuant to the EPA, Baxter will retain (i) the manufacture and sale of saline solutions and (ii) the plastics operations of Baxter and its subsidiaries at its Mountain Home, Arkansas facility, which is not part of the Kidney Care segment. Discontinued Operations - BioPharma Solutions On September 29, 2023, we sold our BPS business to Advent International and Warburg Pincus (collectively, the buyers). Under the terms of the related Equity Purchase agreement entered into with the buyers in May 2023, we were entitled to aggregate consideration of $4.25 billion, subject to adjustment for specified items. After giving effect to those adjustments, we received cash proceeds of $3.96 billion. We recognized a pre-tax gain on the sale of $2.88 billion ($2.59 billion net of tax), which represents the excess of (a) the $3.91 billion in net consideration received, consisting of (i) $3.96 billion in cash proceeds from the buyers, less (ii) $47 million in transaction costs, over (b) the sum of (i) the $840 million net book value of the BPS business upon the closing of the transaction and (ii) BPS's $181 million other comprehensive loss, which was reclassified to earnings. The BPS business, which was historically reported within our former Americas segment, provided contract manufacturing and development services, which include sterile fill-finish manufacturing and support services across clinical and commercial applications, primarily serving customers in the pharmaceutical industry. BPS was historically operated through our former, wholly-owned subsidiaries Baxter Pharmaceutical Solutions LLC, a Delaware limited liability company, and Baxter Oncology GmbH, a German limited liability company (collectively, the divested entities). We concluded that our BPS business met the criteria to be classified as held-for-sale in May 2023. A component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. We analyzed the quantitative and qualitative factors relevant to the divestiture of our BPS business, including its significance to our overall net income (loss) and earnings (loss) per share, and determined that those conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business, including our gain from the sale of that business and the related cash proceeds received, are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation. At closing of the transaction, Baxter Pharmaceutical Solutions LLC included a BPS manufacturing facility in Bloomington Indiana and Baxter Oncology GmbH included a manufacturing facility in Halle Germany. Previously, Baxter Oncology GmbH included an additional manufacturing site in Bielefeld Germany that was not part of the BPS business and was transferred to another Baxter entity prior to closing of the divestiture. Accordingly, amounts related to the Bielefeld site continue to be presented as continuing operations in the accompanying consolidated financial statements. At closing of the transaction, Baxter entered into a Transition Services Agreement (BPS TSA) and a Master Commercial Manufacturing and Supply Agreement (BPS MSA) with the divested entities. Pursuant to the BPS TSA, Baxter and the divested entities will provide to each other, on an interim basis, specific transition services for up to 24 months post-closing to help ensure business continuity and minimize disruptions. Services provided under the BPS TSA include finance, information technology, human resources, integrated supply chain and certain other administrative services. Pursuant to the BPS MSA, the divested entities will provide development, manufacturing, regulatory and other related services for certain Baxter pharmaceutical products for up to 5 years post-closing (with certain extension rights as provided therein). Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations The following table summarizes the major classes of line items included in income (loss) from discontinued operations, net of tax, for the years ended December 31, 2024, 2023 and 2022:
| Kidney Care |  | BioPharma Solutions |  | Total
| Year Ended December 31, |  | Year Ended December 31, |  | Year Ended December 31,
(in millions) | 2024 | 2023 | 2022 |  | 2024 | 2023 | 2022 |  | 2024 | 2023 | 2022
Net sales | $ | 4,513 |  | $ | 4,453 |  | $ | 4,449 |  |  | $ | — |  | $ | 469 |  | $ | 607 |  |  | $ | 4,513 |  | $ | 4,922 |  | $ | 5,056 |
Cost of sales | 2,812 |  | 3,628 |  | 2,932 |  |  | — |  | 216 |  | 276 |  |  | 2,812 |  | 3,844 |  | 3,208 |
Gross margin | 1,701 |  | 825 |  | 1,517 |  |  | — |  | 253 |  | 331 |  |  | 1,701 |  | 1,078 |  | 1,848 |
Selling, general and administrative expenses | 1,203 |  | 993 |  | 762 |  |  | — |  | 45 |  | 28 |  |  | 1,203 |  | 1,038 |  | 790 |
Research and development expenses | 181 |  | 149 |  | 152 |  |  | — |  | 1 |  | 3 |  |  | 181 |  | 150 |  | 155 |
Goodwill impairments | 430 |  | — |  | — |  |  | — |  | — |  | — |  |  | 430 |  | — |  | — |
Other operating expense (income), net | (1) |  | — |  | 1 |  |  | — |  | — |  | — |  |  | (1) |  | — |  | 1 |
Operating income (loss) | (112) |  | (317) |  | 602 |  |  | — |  | 207 |  | 300 |  |  | (112) |  | (110) |  | 902 |
Interest expense, net | 13 |  | 3 |  | 1 |  |  | — |  | (1) |  | — |  |  | 13 |  | 2 |  | 1 |
Other (income) expense, net | 10 |  | 25 |  | 3 |  |  | — |  | 1 |  | 3 |  |  | 10 |  | 26 |  | 6 |
Income (loss) from discontinued operations before gain on disposition and income taxes | (135) |  | (345) |  | 598 |  |  | — |  | 207 |  | 297 |  |  | (135) |  | (138) |  | 895 |
Gain on disposition | — |  | — |  | — |  |  | — |  | 2,882 |  | — |  |  | — |  | 2,882 |  | — |
Income tax expense (benefit) | 177 |  | (95) |  | 139 |  |  | — |  | 357 |  | 64 |  |  | 177 |  | 262 |  | 203 |
Income (loss) from discontinued operations, net of tax | (312) |  | (250) |  | 459 |  |  | — |  | 2,732 |  | 233 |  |  | (312) |  | 2,482 |  | 692 |
Less: Net income attributable to noncontrolling interest included in discontinued operations | 11 |  | 7 |  | 11 |  |  | — |  | — |  | — |  |  | 11 |  | 7 |  | 11 |
Net income (loss) attributable to Baxter stockholders included in discontinued operations | $ | (323) |  | $ | (257) |  | $ | 448 |  |  | $ | — |  | $ | 2,732 |  | $ | 233 |  |  | $ | (323) |  | $ | 2,475 |  | $ | 681 |
For the year ended December 31, 2024, SG&A expenses include $261 million of separation-related costs incurred in connection with the sale of our Kidney Care business. For the year ended December 31, 2023, SG&A expenses include $196 million and $17 million, respectively, of separation-related costs incurred in connection with the sale of our Kidney Care business and the sale of BPS, respectively. The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the consolidated balance sheets as of December 31, 2024 and 2023:
as of December 31 (in millions) | 2024 | 2023
Cash and cash equivalents | $ | 648 |  | $ | 116 |
Accounts receivable, net of allowances | 942 |  | 971 |
Inventories | 821 |  | 906 |
Prepaid expenses and other current assets | 200 |  | 186 |
Current assets of discontinued operations | 2,611 |  | 2,179 |
Property, plant and equipment, net | 1,516 |  | 1,562 |
Goodwill | 265 |  | 721 |
Other intangible assets, net | 148 |  | 161 |
Operating lease right-of-use assets | 204 |  | 188 |
Other non-current assets | 367 |  | 317 |
Non-current assets of discontinued operations | 2,500 |  | 2,949 |
Assets of discontinued operations | $ | 5,111 |  | $ | 5,128 |
Current maturities of finance lease obligations | $ | 1 |  | $ | 1 |
Accounts payable | 344 |  | 360 |
Accrued expenses and other current liabilities | 585 |  | 679 |
Current liabilities of discontinued operations | 930 |  | 1,040 |
Long-term finance lease obligations, less current portion | 37 |  | 41 |
Operating lease liabilities | 173 |  | 173 |
Other non-current liabilities | 344 |  | 337 |
Non-current liabilities of discontinued operations | 554 |  | 551 |
Liabilities of discontinued operations | $ | 1,484 |  | $ | 1,591 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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