Baxter International Inc. (BAX) Business Profile

What it does

Baxter International develops, manufactures and sells medical products used in healthcare facilities and, under physician supervision, in patients’ homes. Founded in 1931 and headquartered in Deerfield, the company is led by President and Chief Executive Officer Andrew Hider.

Its products include sterile intravenous (IV) solutions, which deliver fluids into a patient’s veins, and infusion systems and administration sets used to deliver therapies. Baxter also sells injectable medicines, inhaled anesthetics and nutrition therapies. Its surgical portfolio includes products that help control bleeding and seal tissue, as well as equipment used in operating rooms.

Another part of the business supplies smart hospital beds, patient monitoring and diagnostic technology, and respiratory health devices. Some of these products can connect digitally or analyze data, and Baxter also offers software and tools intended to support care and collaboration.

Customers and users include hospitals, nursing homes, rehabilitation centers, ambulatory surgery centers, doctors’ offices and patients receiving care at home. Baxter sells through its own sales force as well as distributors and other intermediaries. As of December 31, 2025, it manufactured products in over 20 countries and sold them in over 100 countries.

Baxter sold its Kidney Care business in January 2025. That business is reported as a discontinued operation, and prior-period results were adjusted to reflect the sale.

How it makes money

Baxter earns revenue by selling medical supplies, devices, equipment, pharmaceuticals and related services. In 2025, it managed its operations in three reportable segments: Medical Products & Therapies, Healthcare Systems & Technologies, and Pharmaceuticals.

Medical Products & Therapies sold IV solutions, infusion systems and administration sets, nutrition therapies, and surgical products that control bleeding or seal tissue. Healthcare Systems & Technologies sold connected-care tools, smart beds, patient monitoring and diagnostic systems, respiratory devices, and surgical equipment. Pharmaceuticals sold specialty injectable medicines, inhaled anesthetics and drug compounding services, which prepare medicines for customers. Baxter’s third-quarter 2026 results reported Medical Products & Therapies and Healthcare Systems & Technologies as segments, with drug compounding and injectables discussed within Medical Products & Therapies.

Some sales come from consumable products, such as IV solutions and administration sets, while other sales come from equipment and devices. Baxter sells under customer contracts in the United States and internationally. Some contracts run for more than one year and limit its ability to increase prices; some contracts with hospitals, governments and other facilities specify minimum purchase quantities. Group purchasing organizations and integrated delivery networks negotiate prices that their members can access.

Global net sales were $11.24 billion in 2025; third-quarter 2026 global sales were approximately $3 billion.

Baxter reported that third-quarter 2026 infusion systems growth was driven by Spectrum IQ, with contributions from digital solutions and administration sets. Drug compounding also grew, while injectable sales declined, reflecting price deflation and manufacturing challenges at a Round Lake facility. Baxter said its quarterly IV solutions growth was measured from a lower demand baseline following clinical practice changes.

Customers and how it sells

Baxter’s products reach hospitals, nursing homes, rehabilitation centers, ambulatory surgery centers, doctors’ offices, kidney dialysis centers and patients at home under physician supervision. Its customers include hospitals, governments and other facilities that purchase under contracts; some agreements specify minimum quantities.

Many U.S. hospitals and other medical-product customers use group purchasing organizations or integrated delivery networks to negotiate prices. Baxter has agreements with several major U.S. group purchasing organizations, subject to renewal. Segments of its business depend on major contracts with these organizations, delivery networks and other distributors and purchasers.

Baxter uses its own direct sales force and also sells to or through independent distributors, drug wholesalers acting as sales agents, specialty pharmacies and other alternate-site providers. In the United States, Cardinal Health and Medline warehouse and ship a significant portion of Baxter’s products through their distribution centers.

The company operates across Europe, the Middle East, Africa, Asia-Pacific, Latin America and Canada, as well as the United States. As of December 31, 2025, it sold products in over 100 countries. U.S. sales totaled $6.12 billion in 2025, while international sales totaled $5.12 billion in 2025. Baxter employed approximately 37,500 people globally at December 31, 2025, after the Kidney Care sale.

Suppliers and costs

Baxter buys raw materials and components from numerous suppliers worldwide. Many materials are generally available, but some come from a single source or are purchased on the spot market rather than under contract. The company has experienced shortages and works with suppliers and seeks alternatives where beneficial to its procurement strategy.

As of December 31, 2025, Baxter manufactured products in over 20 countries. Its costs include raw materials, components, manufacturing, labor, shipping, research and development, and sales and administrative activities. Research and development expenditures were $518 million in 2025. Capital expenditures totaled $513 million in 2025, including investment in new and existing product capacity.

Baxter has experienced production interruptions and higher costs or shortages of materials and components, including resins and electromechanical devices. It expects tariffs to continue to affect results and says sole-source relationships can limit its ability to find alternative or lower-cost inputs. Longer-term customer contracts can also limit or delay its ability to pass cost increases through to customers.

In third-quarter 2026, Baxter continued to experience supply challenges involving a contract manufacturer. It also said it was discontinuing cephalosporin production at the end of October, while continuing to support contracted customers into 2027.

Competitive position

Baxter faces competition in each of its businesses from domestic and international healthcare, medical products and pharmaceutical companies. Competitors differ across its product categories, and no single company competes with Baxter in all its businesses. No specific competitor is named in the supplied business information.

Baxter says purchasing decisions focus on cost-effectiveness, price, service, product performance and technological innovation. Consolidation among customers and competitors has created pricing and market pressures, while global and regional competitors continue to expand manufacturing capacity and sales and marketing channels. Baxter also says its product breadth, customer relationships, shared manufacturing facilities and technology contribute to its competitive position.

Our reading: The breadth of Baxter’s portfolio and its relationships with hospitals and purchasing organizations support its position across product categories, but negotiated prices and competition in each segment limit the protection those relationships provide. Our reading: Shared facilities and product technology can support cost and performance advantages, though the available evidence does not establish how durable those advantages are against rivals expanding capacity and distribution.

Baxter also relies on patents, trademarks, trade secrets, know-how and confidentiality agreements. Our reading: These rights can protect particular products and technologies, but they do not shield the whole portfolio from competition, and patent disputes can lead to payments or restrictions on product sales.

Growth opportunities

Baxter’s strategy includes developing connected-care offerings and core therapies, introducing products and managing its portfolio. Connected-care products include devices and software that communicate or analyze data, such as smart beds, infusion pumps, monitoring technology and surgical equipment. Core therapies include pharmaceuticals and consumable medical products. Baxter says it is prioritizing product areas where it sees opportunities to serve patients and healthcare professionals, particularly in higher-growth markets.

The company also seeks efficiencies through automation and digitization and uses the Baxter Growth and Performance system to support continuous improvement. It invests in production capacity, quality systems and manufacturing capabilities. Research and development expenditures were $518 million in 2025.

In third-quarter 2026, Baxter reported growth in advanced surgery, drug compounding and infusion systems. It said demand for drug compounding remained strong in the international markets it serves, and connected monitoring benefited from demand for Connex360. Baxter also said it had not observed a change in U.S. hospital capital spending and that its order book reflected demand.

For 2026, Baxter expects organic sales growth of 3-4%. It continues to target approximately three times net leverage by year-end 2026 and has made debt reduction a near-term capital allocation priority. The company also expects transition services related to the former Kidney Care business to conclude by the end of January 2027; the resulting headwind will depend on how quickly it removes stranded costs.

Structural risks

• Supply and costs: Production delays, shortages and higher costs for materials and components have challenged Baxter’s supply chain. Some inputs are sourced from a single supplier, and tariffs and longer-term customer contracts can make cost increases difficult to offset.

• Quality and regulation: Most products require regulatory authorization before sale, and manufacturing facilities and quality systems remain subject to review. Baxter received an FDA warning letter related to its Round Lake facility. It said ending cephalosporin production there would help address some of the cited complexities.

• Infusion pump corrections: The FDA classified voluntary corrections for the Novum IQ large-volume pump as Class I recalls. Baxter stopped distributing and installing it in the United States and Canada, except for medical necessity; the timing of lifting the hold was uncertain. Baxter said it continued working with regulators.

• Customer contracts and pricing: Parts of the business depend on major contracts with purchasing organizations, delivery networks and other purchasers. Customer consolidation, negotiated prices and contracts that limit price increases can pressure results.

• Portfolio changes and demand: Baxter expects additional costs associated with the reduced size of the company after the Kidney Care sale. It also expects reduced IV solutions demand following customer conservation practices and clinical changes after Hurricane Helene’s disruption of its North Cove facility.

Bottom line

Our reading

Baxter combines consumable therapies and medicines with hospital equipment and connected-care technology, selling through direct relationships and distribution channels across many countries. Its position rests on that portfolio and customer access, while pricing contracts, supply disruptions and product-quality issues constrain operations; the company is also reducing debt and adjusting its cost base after selling Kidney Care.