Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 20, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 1-4448 | |
Entity Registrant Name | BAXTER INTERNATIONAL INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 36-0781620 | |
Entity Address, Address Line One | One Baxter Parkway, | |
Entity Address, City or Town | Deerfield, | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60015 | |
City Area Code | 224. | |
Local Phone Number | 948.2000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 504,120,759 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000010456 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock, $1.00 par value | New York Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $1.00 par value | |
Trading Symbol | BAX (NYSE) | |
Security Exchange Name | NYSE | |
Common Stock, $1.00 par value | Chicago Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $1.00 par value | |
Trading Symbol | BAX (NYSE) | |
Security Exchange Name | CHX | |
0.4% Global Notes due 2024 | New York Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 0.4% Global Notes due 2024 | |
Trading Symbol | BAX 24 | |
Security Exchange Name | NYSE | |
1.3% Global Notes due 2025 | New York Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.3% Global Notes due 2025 | |
Trading Symbol | BAX 25 | |
Security Exchange Name | NYSE | |
1.3% Global Notes due 2029 | New York Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 1.3% Global Notes due 2029 | |
Trading Symbol | BAX 29 | |
Security Exchange Name | NYSE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,601 | $ 2,951 |
Accounts receivable, net of allowances of $120 in 2022 and $122 in 2021 | 2,555 | 2,629 |
Inventories | 2,675 | 2,453 |
Prepaid expenses and other current assets | 979 | 839 |
Total current assets | 7,810 | 8,872 |
Property, plant and equipment, net | 4,799 | 5,178 |
Goodwill | 6,639 | 9,836 |
Other intangible assets, net | 6,927 | 7,792 |
Operating lease right-of-use assets | 546 | 630 |
Other non-current assets | 1,244 | 1,213 |
Total assets | 27,965 | 33,521 |
Current liabilities: | ||
Short-term debt | 275 | 301 |
Current maturities of long-term debt and finance lease obligations | 4 | 210 |
Accounts payable | 1,234 | 1,246 |
Accrued expenses and other current liabilities | 2,195 | 2,479 |
Total current liabilities | 3,708 | 4,236 |
Long-term debt and finance lease obligations, less current portion | 16,153 | 17,149 |
Operating lease liabilities | 454 | 522 |
Other non-current liabilities | 2,071 | 2,493 |
Total liabilities | 22,386 | 24,400 |
Commitments and contingencies | ||
Equity: | ||
Common stock, $1 par value, authorized 2,000,000,000 shares, issued 683,494,944 shares in 2022 and 2021 | 683 | 683 |
Common stock in treasury, at cost,179,451,293 shares in 2022 and 181,879,516 shares in 2021 | (11,406) | (11,488) |
Additional contributed capital | 6,297 | 6,197 |
Retained earnings | 14,015 | 17,065 |
Accumulated other comprehensive income (loss) | (4,054) | (3,380) |
Total Baxter stockholders’ equity | 5,535 | 9,077 |
Noncontrolling interests | 44 | 44 |
Total equity | 5,579 | 9,121 |
Total liabilities and equity | $ 27,965 | $ 33,521 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable, current | $ 120 | $ 122 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized (in shares) | 2,000,000,000 | 2,000,000,000 |
Common stock, issued (in shares) | 683,494,944 | 683,494,944 |
Treasury stock, shares (in shares) | 179,451,293 | 181,879,516 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) (unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Net sales | $ 3,773 | $ 3,226 | $ 11,226 | $ 9,270 |
Cost of sales | 2,640 | 1,905 | 7,292 | 5,571 |
Gross margin | 1,133 | 1,321 | 3,934 | 3,699 |
Selling, general and administrative expenses | 947 | 680 | 2,975 | 1,982 |
Research and development expenses | 152 | 129 | 450 | 396 |
Goodwill impairments | 2,785 | 0 | 2,785 | 0 |
Other operating expense (income), net | 48 | (1) | 20 | (6) |
Operating income (loss) | (2,799) | 513 | (2,296) | 1,327 |
Interest expense, net | 104 | 50 | 278 | 118 |
Other (income) expense, net | 63 | 12 | 3 | 15 |
Income (loss) before income taxes | (2,966) | 451 | (2,577) | 1,194 |
Income tax expense (benefit) | (32) | (1) | 29 | 141 |
Net income (loss) | (2,934) | 452 | (2,606) | 1,053 |
Net income attributable to noncontrolling interests | 3 | 2 | 8 | 7 |
Net income (loss) attributable to Baxter stockholders | $ (2,937) | $ 450 | $ (2,614) | $ 1,046 |
Earnings (loss) per share | ||||
Basic (in dollars per share) | $ (5.83) | $ 0.90 | $ (5.20) | $ 2.08 |
Diluted (in dollars per share) | $ (5.83) | $ 0.89 | $ (5.20) | $ 2.06 |
Weighted-average number of shares outstanding | ||||
Basic (in shares) | 504 | 500 | 503 | 503 |
Diluted (in shares) | 504 | 506 | 503 | 509 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (2,934) | $ 452 | $ (2,606) | $ 1,053 |
Other comprehensive income (loss), net of tax: | ||||
Currency translation adjustments, net of tax expense (benefit) of ($16) and $3 for the three months ended September 30, 2022 and 2021, respectively, and ($25) and $16 for the nine months ended September 30, 2022 and 2021, respectively. | (319) | (137) | (751) | (257) |
Pension and other postretirement benefits, net of tax expense of $5 and $8 for the three months ended September 30, 2022 and 2021, respectively, and $13 and $19 for the nine months ended September 30, 2022 and 2021, respectively. | 16 | 22 | 48 | 63 |
Hedging activities, net of tax expense of $5 and $3 for the three months ended September 30, 2022 and 2021, respectively, and $8 and $8 for the nine months ended September 30, 2022 and 2021, respectively. | 16 | 9 | 27 | 26 |
Available-for-sale debt securities, net of tax expense of zero for the three months ended September 30, 2022 and 2021, respectively, and $1 and zero for the nine months ended September 30, 2022 and 2021, respectively. | 0 | 0 | 2 | 0 |
Total other comprehensive income (loss), net of tax | (287) | (106) | (674) | (168) |
Comprehensive income (loss) | (3,221) | 346 | (3,280) | 885 |
Less: Comprehensive income attributable to noncontrolling interests | 3 | 2 | 8 | 7 |
Comprehensive income (loss) attributable to Baxter stockholders | $ (3,224) | $ 344 | $ (3,288) | $ 878 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (unaudited) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Currency translation adjustments, tax | $ (16) | $ 3 | $ (25) | $ 16 |
Pension and other postretirement benefits, tax | 5 | 8 | 13 | 19 |
Hedging activities, tax | 5 | 3 | 8 | 8 |
Debt securities, tax | $ 0 | $ 0 | $ 1 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Equity (unaudited) - USD ($) $ in Millions | Total | Total Baxter stockholders' equity | Common stock | Common stock in treasury | Additional contributed capital | Retained earnings | Accumulated other comprehensive income (loss) | Noncontrolling interests |
Gains (losses) | ||||||||
Treasury stock, shares (in shares) | 179,000,000 | |||||||
Balance, beginning of period (in shares) at Dec. 31, 2020 | 683,000,000 | |||||||
Balance, beginning of period (in usd) at Dec. 31, 2020 | $ 8,726 | $ 8,689 | $ 683 | $ (11,051) | $ 6,043 | $ 16,328 | $ (3,314) | $ 37 |
Gains (losses) | ||||||||
Net income (loss) | 1,053 | 1,046 | 1,046 | 7 | ||||
Other comprehensive income (loss) | $ (168) | (168) | (168) | |||||
Purchases of treasury stock (in shares) | 7,300,000 | 7,000,000 | ||||||
Purchases of treasury stock | $ (600) | (600) | $ (600) | |||||
Stock issued under employee benefit plans and other (in shares) | (3,000,000) | |||||||
Stock issued under employee benefit plans and other | 210 | 210 | $ 122 | 88 | ||||
Dividends declared on common stock | (407) | (407) | (407) | |||||
Change in noncontrolling interests | 1 | 1 | ||||||
Balance, end of period (in shares) at Sep. 30, 2021 | 683,000,000 | |||||||
Balance, end of period (in usd) at Sep. 30, 2021 | 8,815 | 8,770 | $ 683 | $ (11,529) | 6,131 | 16,967 | (3,482) | 45 |
Gains (losses) | ||||||||
Treasury stock, shares (in shares) | 184,000,000 | |||||||
Balance, beginning of period (in shares) at Jun. 30, 2021 | 683,000,000 | |||||||
Balance, beginning of period (in usd) at Jun. 30, 2021 | 8,535 | 8,494 | $ 683 | $ (11,561) | 6,090 | 16,658 | (3,376) | 41 |
Gains (losses) | ||||||||
Net income (loss) | 452 | 450 | 450 | 2 | ||||
Other comprehensive income (loss) | (106) | (106) | (106) | |||||
Stock issued under employee benefit plans and other (in shares) | (1,000,000) | |||||||
Stock issued under employee benefit plans and other | 73 | 73 | $ 32 | 41 | ||||
Dividends declared on common stock | (141) | (141) | (141) | |||||
Change in noncontrolling interests | 2 | 2 | ||||||
Balance, end of period (in shares) at Sep. 30, 2021 | 683,000,000 | |||||||
Balance, end of period (in usd) at Sep. 30, 2021 | $ 8,815 | 8,770 | $ 683 | $ (11,529) | 6,131 | 16,967 | (3,482) | 45 |
Gains (losses) | ||||||||
Treasury stock, shares (in shares) | 183,000,000 | |||||||
Treasury stock, shares (in shares) | 181,879,516 | 182,000,000 | ||||||
Balance, beginning of period (in shares) at Dec. 31, 2021 | 683,000,000 | |||||||
Balance, beginning of period (in usd) at Dec. 31, 2021 | $ 9,121 | 9,077 | $ 683 | $ (11,488) | 6,197 | 17,065 | (3,380) | 44 |
Gains (losses) | ||||||||
Net income (loss) | (2,606) | (2,614) | (2,614) | 8 | ||||
Other comprehensive income (loss) | $ (674) | (674) | (674) | |||||
Purchases of treasury stock (in shares) | 500,000 | |||||||
Purchases of treasury stock | $ (32) | (32) | $ (32) | |||||
Stock issued under employee benefit plans and other (in shares) | (3,000,000) | |||||||
Stock issued under employee benefit plans and other | 214 | 214 | $ 114 | 100 | ||||
Dividends declared on common stock | (436) | (436) | (436) | |||||
Change in noncontrolling interests | (8) | (8) | ||||||
Balance, end of period (in shares) at Sep. 30, 2022 | 683,000,000 | |||||||
Balance, end of period (in usd) at Sep. 30, 2022 | 5,579 | 5,535 | $ 683 | $ (11,406) | 6,297 | 14,015 | (4,054) | 44 |
Gains (losses) | ||||||||
Treasury stock, shares (in shares) | 180,000,000 | |||||||
Balance, beginning of period (in shares) at Jun. 30, 2022 | 683,000,000 | |||||||
Balance, beginning of period (in usd) at Jun. 30, 2022 | 8,903 | 8,859 | $ 683 | $ (11,409) | 6,253 | 17,099 | (3,767) | 44 |
Gains (losses) | ||||||||
Net income (loss) | (2,934) | (2,937) | (2,937) | 3 | ||||
Other comprehensive income (loss) | (287) | (287) | (287) | |||||
Purchases of treasury stock | (24) | (24) | $ (24) | |||||
Stock issued under employee benefit plans and other (in shares) | (1,000,000) | |||||||
Stock issued under employee benefit plans and other | 71 | 71 | $ 27 | 44 | ||||
Dividends declared on common stock | (147) | (147) | (147) | |||||
Change in noncontrolling interests | (3) | (3) | ||||||
Balance, end of period (in shares) at Sep. 30, 2022 | 683,000,000 | |||||||
Balance, end of period (in usd) at Sep. 30, 2022 | $ 5,579 | $ 5,535 | $ 683 | $ (11,406) | $ 6,297 | $ 14,015 | $ (4,054) | $ 44 |
Gains (losses) | ||||||||
Treasury stock, shares (in shares) | 179,451,293 | 179,000,000 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | ||
Cash flows from operations | |||
Net income (loss) | $ (2,606) | $ 1,053 | |
Adjustments to reconcile net income (loss) to cash flows from operations: | |||
Depreciation and amortization | 1,069 | 645 | |
Deferred income taxes | (174) | (98) | |
Stock compensation | 122 | 93 | |
Net periodic pension and other postretirement costs | 42 | 77 | |
Intangible asset impairments | 332 | 0 | |
Goodwill impairments | 2,785 | 0 | |
Loss on product divestiture arrangement | 54 | 0 | |
Reclassification of cumulative translation loss to earnings | 65 | 0 | |
Other | (35) | 46 | |
Changes in balance sheet items: | |||
Accounts receivable, net | (116) | (128) | |
Inventories | (410) | (149) | |
Prepaid expenses and other current assets | (98) | (51) | |
Accounts payable | 84 | 14 | |
Accrued expenses and other current liabilities | (250) | 91 | |
Other | (92) | (64) | |
Cash flows from operations | 772 | 1,529 | |
Cash flows from investing activities | |||
Capital expenditures | (479) | (508) | |
Acquisitions, net of cash acquired, and investments | (206) | (463) | |
Other investing activities, net | 10 | 38 | |
Cash flows from investing activities | (675) | (933) | |
Cash flows from financing activities | |||
Repayments of debt | (953) | (407) | |
Issuances of debt | 0 | 50 | |
Net increases (decreases) in debt with original maturities of three months or less | 30 | 251 | |
Cash dividends on common stock | (427) | (390) | |
Proceeds from stock issued under employee benefit plans | 114 | 135 | |
Purchases of treasury stock | (32) | (600) | |
Debt issuance costs | 0 | (37) | |
Other financing activities, net | (51) | (33) | |
Cash flows from financing activities | (1,319) | (1,031) | |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (130) | (40) | |
Decrease in cash, cash equivalents and restricted cash | (1,352) | (475) | |
Cash, cash equivalents and restricted cash at beginning of period | [1] | 2,956 | 3,736 |
Cash, cash equivalents and restricted cash at end of period | [1] | 1,604 | 3,261 |
Cash and cash equivalents | 1,601 | 3,258 | |
Restricted cash included in prepaid expenses and other current assets | $ 3 | $ 3 | |
[1]The following table provides a reconciliation of cash, cash equivalents and restricted cash shown above to the amounts reported within the condensed consolidated balance sheet as of September 30, 2022, December 31, 2021, and September 30, 2021 (in millions): September 30, 2022 December 31, 2021 September 30, 2021 Cash and cash equivalents $ 1,601 $ 2,951 $ 3,258 Restricted cash included in prepaid expenses and other current assets 3 5 3 Cash, cash equivalents and restricted cash $ 1,604 $ 2,956 $ 3,261 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Annual Report). In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year. Risks and Uncertainties Related to COVID-19 and Global Economic and Other Conditions Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses. Over the course of the pandemic, our business has been impacted by shifting healthcare priorities and significant volatility in the demand for our products. For further information about our revenues by product category, refer to Note 9. Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic. Concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron variants, subvariants and other virus mutations as well as vaccine distribution and hesitancy. The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to moratoriums on elective procedures and mandatory quarantines and travel restrictions), resulting in higher levels of absenteeism, including at our manufacturing and distribution facilities. Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility. We have experienced significant challenges to our global supply chain in recent periods, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, resulting from the pandemic and other exogenous factors including significant weather events, elevated inflation levels, disruptions to certain ports of call around the world, the war in Ukraine and other geopolitical events. We expect to experience some of these and other challenges related to our supply chain in future periods. These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories due to our inability to fully satisfy demand and may continue to have a negative impact on our sales in the future. We expect that the challenges caused by the pandemic as well as global economic conditions, among other factors, may continue to have an adverse effect on our business. New Accounting Standards Recently adopted accounting pronouncements As of January 1, 2022, we adopted Accounting Standards Update (ASU) 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement. These changes are intended to avoid recognizing a day-one loss for a lease with variable payments even though the lessor expects the arrangement will be profitable overall. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. |
ACQUISITIONS AND OTHER ARRANGEM
ACQUISITIONS AND OTHER ARRANGEMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS AND OTHER ARRANGEMENTS | ACQUISITIONS AND OTHER ARRANGEMENTS Hillrom On December 13, 2021, we completed our acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion. Including the assumption of Hillrom's outstanding debt, the enterprise value of the transaction was approximately $12.8 billion. Under the terms of the transaction agreement, Hillrom shareholders received $156.00 in cash per outstanding Hillrom common share. The following table summarizes the fair value of the total consideration paid: (in millions) Cash consideration paid to Hillrom shareholders (a) $ 10,474 Fair value of equity awards issued to Hillrom equity award holders (b) 2 Total Consideration $ 10,476 (a) Represents cash consideration transferred of $156.00 per outstanding Hillrom common share to existing shareholders and holders of equity awards that vested at closing pursuant to their original terms. (b) Represents the pre-acquisition service portion of the fair value of 668 thousand replacement restricted stock units issued to Hillrom equity award holders at closing. The valuation of assets acquired and liabilities assumed has not yet been finalized as of September 30, 2022. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for acquired intangible assets, goodwill and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date: (in millions) Assets acquired and liabilities assumed Cash and cash equivalents $ 399 Accounts receivable 562 Inventories 557 Prepaid expenses and other current assets 49 Property, plant and equipment 514 Goodwill 6,810 Other intangible assets 6,029 Operating lease right-of-use assets 74 Other non-current assets 132 Short-term debt (250) Accounts payable (140) Accrued expenses and other current liabilities (558) Long-term debt and finance lease obligations (2,118) Operating lease liabilities (57) Other non-current liabilities (1,527) Total assets acquired and liabilities assumed $ 10,476 In the first nine months of 2022 we recorded measurement period adjustments, primarily impacting accounts receivable, property, plant and equipment, other intangible assets, and deferred income tax liabilities. Individually the measurement period adjustments were not material and in total increased goodwill by $25 million. The measurement period adjustments did not have a significant impact to our results of operations. The goodwill from the Hillrom acquisition, which is not deductible for tax purposes, includes the value of an assembled workforce as well as the overall strategic benefits provided to our product portfolio and is included in the Hillrom segment. See Note 4 for additional information about impairments recognized in the third quarter of 2022 related to goodwill and certain intangible assets acquired in the Hillrom acquisition. For the nine months ended September 30, 2022, we recognized $159 million of incremental costs of sales from the fair value step-ups on acquired Hillrom inventory that was sold in the first quarter. Other Business Development Activities Celerity Pharmaceuticals, LLC In September 2013, we entered into an agreement with Celerity Pharmaceuticals, LLC (Celerity) to develop certain acute care generic injectable premix and oncolytic products through regulatory approval. We transferred our rights in these products to Celerity and Celerity assumed ownership and responsibility for development of the products. We are obligated to purchase the individual product rights from Celerity if the products obtain regulatory approval. In December 2020, we entered into an agreement with a third party to divest our rights to one of the products that was being developed by Celerity, a generic version of liposomal doxorubicin, for less than $1 million if that product were to receive regulatory approval in the U.S. and European Union in 2022. Liposomal doxorubicin is a chemotherapy medicine used to treat various types of cancer and we entered into this transaction to divest our rights to this generic version of that product after we had separately entered into a transaction to acquire the branded version. The related regulatory approvals were subsequently obtained for the generic version of liposomal doxorubicin and we recognized a loss of approximately $54 million in the third quarter of 2022, representing the difference between the amount we owe Celerity following those regulatory approvals and the proceeds that we will receive from our divestiture of those product rights. That loss is reported within other operating expense (income), net in our condensed consolidated statements of operations for the three and nine months ended September 30, 2022. Zosyn In March 2022, we entered into an agreement with a subsidiary of Pfizer Inc. to acquire the rights to Zosyn, a premixed frozen piperacillin-tazobactam product, in the U.S. and Canada. Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia. Under the terms of the acquisition, we paid the acquisition price of $122 million currently, received specified intellectual property, including patent rights, in the first quarter and will receive additional intellectual property, including the product rights to Zosyn, in the first quarter of 2023. Under the arrangement, we are entitled to receive profit sharing payments from sales of Zosyn until the product rights transfer to us in March 2023. The transaction has been accounted for as an asset acquisition, as substantially all of the fair value of the assets being acquired under the arrangement was concentrated in the product rights that we will receive, which we classify as a developed technology intangible asset. Accordingly, the $122 million purchase price was primarily allocated to the developed technology intangible asset class and will be amortized over an estimated useful life of 9 years. |
SUPPLEMENTAL FINANCIAL INFORMAT
SUPPLEMENTAL FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL FINANCIAL INFORMATION | SUPPLEMENTAL FINANCIAL INFORMATION Allowance for Doubtful Accounts The following table is a summary of the changes in our allowance for doubtful accounts for the three and nine months ended September 30, 2022 and 2021. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Balance at beginning of period $ 125 $ 117 $ 122 $ 125 Charged to costs and expenses 2 2 11 (1) Write-offs (2) (2) (4) (3) Currency translation adjustments (5) (2) (9) (6) Balance at end of period $ 120 $ 115 $ 120 $ 115 Inventories (in millions) September 30, December 31, Raw materials $ 690 $ 591 Work in process 305 300 Finished goods 1,680 1,562 Inventories $ 2,675 $ 2,453 Property, Plant and Equipment, Net (in millions) September 30, December 31, Property, plant and equipment, at cost $ 11,084 $ 11,728 Accumulated depreciation (6,285) (6,550) Property, plant and equipment, net $ 4,799 $ 5,178 In September 2022, we signed a purchase agreement with a buyer to sell our corporate headquarters in Deerfield, Illinois for $52 million. The related assets are classified as held-for-sale and are presented within prepaid expenses and other current assets in the accompanying consolidated balance sheet as of September 30, 2022. While the closing remains subject to the satisfaction of various closing conditions (including satisfactory completion of municipal diligence by the buyer), we expect the transaction to close in 2023 and the net book value of the assets approximates the transaction price net of estimated selling costs. Interest Expense, Net Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Interest expense, net of capitalized interest $ 109 $ 54 $ 290 $ 128 Interest income (5) (4) (12) (10) Interest expense, net $ 104 $ 50 $ 278 $ 118 Other (Income) Expense, Net Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Foreign exchange (gains) losses, net $ — $ — $ (26) $ 5 Pension and other postretirement benefit plans (5) 4 (17) 11 Pension curtailment — — (11) — Change in fair value of marketable equity securities 3 9 (5) 2 Reclassification of cumulative translation loss to earnings 65 — 65 — Other, net — (1) (3) (3) Other (income) expense, net $ 63 $ 12 $ 3 $ 15 We have been winding down our operations in Argentina since early 2021 and we determined that the net assets of the related entities were substantially liquidated during the third quarter of 2022. As a result of that determination, we reclassified their $65 million cumulative translation loss from accumulated other comprehensive income (loss) to other (income) expense, net. Non-Cash Operating and Investing Activities Right-of-use operating lease assets obtained in exchange for lease obligations for the nine months ended September 30, 2022 and 2021 were $59 million and $69 million, respectively. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill The following is a reconciliation of goodwill by business segment. (in millions) Americas EMEA APAC Hillrom Total Balance as of December 31, 2021 $ 2,517 $ 309 $ 224 $ 6,786 $ 9,836 Acquisition accounting adjustments — — — 25 25 Impairments — — — (2,785) (2,785) Currency translation (241) (29) (22) (145) (437) Balance as of September 30, 2022 $ 2,276 $ 280 $ 202 $ 3,881 $ 6,639 We assess goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We recognize a goodwill impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value. Goodwill Impairments As described in Note 2, we acquired Hillrom on December 13, 2021 and recognized $6.8 billion of goodwill and $6.0 billion of other intangible assets, including $1.9 billion of indefinite-lived intangible assets, in connection with that acquisition. Our Hillrom segment includes the following three reporting units: Patient Support Systems, Front Line Care and Surgical Solutions. During the third quarter of 2022, we performed trigger-based impairment tests of the goodwill of each of those three reporting units, as well as the indefinite-lived intangible assets, consisting primarily of trade names, that we acquired in connection with the Hillrom acquisition. We performed those tests as of September 30, 2022 due to (a) current macroeconomic conditions, including the rising interest rate environment and broad declines in equity valuations, and (b) reduced earnings forecasts for our three Hillrom reporting units, driven primarily by current shortages of certain component parts used in our products, raw materials inflation and increased supply chain costs. The impairment tests resulted in total pre-tax goodwill impairment charges of $2.8 billion in the third quarter of 2022, consisting of a $1.4 billion goodwill impairment for our Patient Support Systems reporting unit, a $1.0 billion goodwill impairment for our Front Line Care reporting unit and a $0.4 billion goodwill impairment for our Surgical Solutions reporting unit. See further discussion below for information regarding intangible asset impairment charges recognized during the third quarter of 2022. The fair values of the reporting units tested for impairment during the third quarter of 2022 were determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach). Significant inputs to the reporting unit fair value measurements included forecasted cash flows, discount rates, terminal growth rates and earnings multiples. Our reporting unit fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. Other intangible assets, net The following is a summary of our other intangible assets. Indefinite-lived intangible assets (in millions) Customer relationships Developed technology, including patents Other amortized intangible assets Trade names In process Research and Development Total September 30, 2022 Gross other intangible assets $ 3,447 $ 3,752 $ 310 $ 1,578 $ 213 $ 9,300 Accumulated amortization (410) (1,743) (220) — — (2,373) Other intangible assets, net $ 3,037 $ 2,009 $ 90 $ 1,578 $ 213 $ 6,927 December 31, 2021 Gross other intangible assets $ 3,437 $ 3,801 $ 344 $ 1,910 $ 230 $ 9,722 Accumulated amortization (162) (1,556) (212) — — (1,930) Other intangible assets, net $ 3,275 $ 2,245 $ 132 $ 1,910 $ 230 $ 7,792 Intangible asset amortization expense was $168 million and $68 million for the three months ended September 30, 2022 and 2021, respectively, and $578 million and $199 million for the nine months ended September 30, 2022 and 2021. Indefinite-lived Intangible Asset Impairments In addition to the goodwill impairments discussed above, we recognized pre-tax impairment charges of $332 million in the third quarter of 2022 to reduce the carrying amounts of certain indefinite-lived intangible assets, which related to trade names acquired in the Hillrom acquisition, to their estimated fair values. Those intangible asset impairment charges are classified within cost of sales in the accompanying condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2022. The fair values of the indefinite-lived intangible assets tested for impairment were determined using a discounted cash flow model and significant inputs included forecasted cash flows, royalty rates and discount rates. Our indefinite-lived intangible asset fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. |
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS Significant Debt Activity In December 2021, we issued $800 million of 0.868% senior notes due in 2023, $1.4 billion of 1.322% senior notes due in 2024, $1.45 billion of 1.915% senior notes due in 2027, $1.25 billion of 2.272% senior notes due in 2028, $1.55 billion of 2.539% senior notes due in 2032, $750 million of 3.132% senior notes due in 2051, $300 million of floating rate senior notes due in 2023 and $300 million of floating rate senior notes due in 2024 (collectively, the Hillrom notes) to fund a portion of the consideration for the Hillrom acquisition, repay certain indebtedness of Hillrom and to pay fees and expenses related to the foregoing. In conjunction with the issuances of the Hillrom notes, we entered into a registration rights agreement in which we agreed to file a registration statement with the SEC with respect to an offer to exchange the Hillrom notes for new issues of notes with the same terms registered under the Securities Act of 1933, as amended. Those exchange offers with respect to the Hillrom notes were completed in the second quarter of 2022. In the first half of 2022, we repaid $335 million of our $2.0 billion three-year term loan facility and $355 million of our $2.0 billion five-year term loan facility. The loss from the early extinguishment of this debt was not significant. In the third quarter of 2022, we amended the credit agreements governing our term loan facility and our U.S. dollar-denominated revolving credit facility and the guaranty agreement with respect to our Euro-denominated revolving credit facility, in each case to delay the commencement of our net leverage ratio covenant step-down schedule until June 30, 2024. We also amended the credit agreements governing our term loan facility and our U.S. dollar denominated revolving credit facility to transition the benchmark rate from LIBOR to the Secured Overnight Financing Rate (SOFR). In the third quarter of 2022, we repaid $203 million of our 2.4% senior dues due in 2022. Credit Facilities Our U.S. dollar-denominated revolving credit facility has a capacity of $2.5 billion and our Euro-denominated revolving credit facility has a capacity of €200 million. Each of the facilities matures in 2026. There were no borrowings outstanding under these credit facilities as of September 30, 2022 or December 31, 2021. Our commercial paper borrowing arrangements require us to maintain undrawn borrowing capacity under our credit facilities for an amount at least equal to our outstanding commercial paper borrowings. Commercial Paper As of September 30, 2022, we had $275 million of commercial paper outstanding with a weighted-average interest rate of 3.02% and an original weighted-average term of 49 days. As of December 31, 2021, we had $300 million of commercial paper outstanding with a weighted-average interest rate of 0.27% and an original weighted-average term of 88 days. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We are involved in product liability, patent, commercial, and other legal matters that arise in the normal course of our business. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate, the minimum amount in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded. As of September 30, 2022 and December 31, 2021, our total recorded reserves with respect to legal and environmental matters were $31 million and $72 million, respectively. We have established reserves for certain of the matters discussed below. We are not able to estimate the amount or range of any loss for certain contingencies for which there is no reserve or additional loss for matters already reserved. While our liability in connection with these claims cannot be estimated and the resolution thereof in any reporting period could have a significant impact on our results of operations and cash flows for that period, the outcome of these legal proceedings is not expected to have a material adverse effect on our consolidated financial position. While we believe that we have valid defenses in the matters set forth below, litigation is inherently uncertain, excessive verdicts do occur, and we may incur material judgments or enter into material settlements of claims. In addition to the matters described below, we remain subject to the risk of future administrative and legal actions. With respect to governmental and regulatory matters, these actions may lead to product recalls, injunctions, and other restrictions on our operations and monetary sanctions, including significant civil or criminal penalties. With respect to intellectual property, we may be exposed to significant litigation concerning the scope of our and others’ rights. Such litigation could result in a loss of patent protection or the ability to market products, which could lead to a significant loss of sales, or otherwise materially affect future results of operations. Environmental We are involved as a potentially responsible party (PRP) for environmental clean-up costs at six Superfund sites. Under the U.S. Superfund statute and many state laws, generators of hazardous waste sent to a disposal or recycling site are liable for site cleanup if contaminants from that property later leak into the environment. The laws generally provide that a PRP may be held jointly and severally liable for the costs of investigating and remediating the site. Separate from these Superfund cases noted above, we are involved in an ongoing environmental remediations associated with historic operations at certain of our facilities. As of September 30, 2022 and December 31, 2021, our environmental reserves, which are measured on an undiscounted basis, were $17 million and $18 million, respectively. After considering these reserves, the outcome of these matters is not expected to have a material adverse effect on our financial position or results of operations. General Litigation In August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011. In November 2019, we and certain of our officers were named in a class action complaint captioned Ethan E. Silverman et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased shares of our common stock during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter common stock between February 21, 2019 and October 23, 2019. The plaintiff alleged that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to certain intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses, as well as our internal controls over financial reporting. On January 29, 2020, the Court appointed Varma Mutual Pension Insurance Company and Louisiana Municipal Police Employees Retirement System as lead plaintiffs in the case. Plaintiffs filed an amended complaint on June 25, 2020 containing substantially the same allegations. On August 24, 2020, we filed a motion to dismiss the amended complaint. On January 12, 2021, the Court granted our motion to dismiss the amended complaint but gave plaintiffs an opportunity to file a further-amended complaint. The parties reached an agreement to settle the case for $16 million, subject to the completion of confirmatory discovery and final approval by the Court. The Court granted final approval of the settlement on August 11, 2021 and the settlement became effective on September 13, 2021. As initially disclosed in our Form 8-K on October 24, 2019, we voluntarily advised the staff of the SEC of an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchanges gains and losses. We also received a stockholder request for inspection of our books and records in connection with the October 24, 2019 announcement. The Company has cooperated with the staff of the SEC in its investigation into related matters, and on February 18, 2022, we reached a settlement with the SEC. Without admitting or denying the findings in the administrative order issued by the SEC, we agreed to pay a civil penalty of $18 million and to cease and desist from violations of specified provisions of the federal securities laws and related rules. In the order, the SEC acknowledged the Company’s cooperation. We paid the penalty in the first quarter of 2022. In March 2020, two lawsuits were filed against us in the Northern District of Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used in our manufacturing facility in Mountain Home, Arkansas to sterilize certain of our products. The plaintiffs sought damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. The parties reached agreement to settle these lawsuits in the third quarter of 2021 for amounts that were not material to our financial results, which were paid in the fourth quarter of 2021. We have since resolved, without litigation, additional claims of injuries from exposure to ethylene oxide at Mountain Home for amounts within accruals previously established as of December 31, 2021. On October 20, 2022, a lawsuit was filed against us in the Western District of Arkansas alleging injury as a result of exposure to ethylene oxide at Mountain Home. In July 2021, Hill-Rom, Inc. received a subpoena (from the United States Office of Inspector General for the Department of Health and Human Services (DHHS) requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Hillrom has been working with the DHHS and the Department of Justice (DOJ) to provide information responsive to the subpoena. Hillrom also voluntarily began a related internal review and Hillrom and now Baxter have been cooperating fully with the DHHS and the DOJ with respect to these matters. The DHHS often issues this type of subpoena when investigating alleged violations of the False Claims Act. On December 28, 2021, Linet Americas, Inc. (Linet) filed a complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc. in the United States District Court for the Northern District of Illinois, captioned Linet Americas, Inc. v. Hill-Rom Holdings, Inc.; Hill-Rom Company, Inc.; Hill-Rom Services, Inc. Linet alleges that Hillrom violated Sections 1, 2 and 3 of The Sherman Antitrust Act of 1890 and the Illinois Antitrust Act by |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Cash Dividends Cash dividends declared per share for the three and nine months ended September 30, 2022 were $0.29 and $0.86. Cash dividends declared per share for the three and nine months ended September 30, 2021 were $0.280 and $0.805. Stock Repurchase Programs |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income (loss), cumulative translation adjustments (CTA), certain gains and losses from pension and other postretirement employee benefit (OPEB) plans and gains and losses on cash flow hedges. The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the nine months ended September 30, 2022 and 2021. (in millions) CTA Pension and OPEB plans Hedging activities Available-for-sale Debt securities Total Gains (losses) Balance as of December 31, 2021 $ (2,907) $ (347) $ (126) $ — $ (3,380) Other comprehensive income (loss) before reclassifications (816) 29 33 2 (752) Amounts reclassified from AOCI (a) 65 19 (6) — 78 Net other comprehensive income (loss) (751) 48 27 2 (674) Balance as of September 30, 2022 $ (3,658) $ (299) $ (99) $ 2 $ (4,054) (in millions) CTA Pension and OPEB plans Hedging activities Total Gains (losses) Balance as of December 31, 2020 $ (2,587) $ (574) $ (153) $ (3,314) Other comprehensive income (loss) before (257) 13 5 (239) Amounts reclassified from AOCI (a) — 50 21 71 Net other comprehensive income (loss) (257) 63 26 (168) Balance as of September 30, 2021 $ (2,844) $ (511) $ (127) $ (3,482) (a) See table below for details about these reclassifications. The following is a summary of the amounts reclassified from AOCI to net income during the three and nine months ended September 30, 2022 and 2021. Amounts reclassified from AOCI (a) (in millions) Three months ended September 30, 2022 Nine months ended Location of impact in income statement CTA Reclassification of cumulative translation loss to earnings $ (65) $ (65) Other (income) expense, net Less: Tax effect — — Income tax expense $ (65) $ (65) Net of tax Pension and OPEB items Amortization of net losses and prior service costs or credits $ (8) $ (25) Other (income) expense, net Less: Tax effect 2 6 Income tax expense $ (6) $ (19) Net of tax Gains (losses) on hedging activities Foreign exchange contracts $ 6 $ 11 Cost of sales Interest rate contracts (1) (4) Interest expense, net 5 7 Total before tax Less: Tax effect (1) (1) Income tax expense $ 4 $ 6 Net of tax Total reclassifications for the period $ (67) $ (78) Total net of tax (a) Amounts in parentheses indicate reductions to net income Amounts reclassified from AOCI (a) (in millions) Three months ended September 30, 2021 Nine months ended September 30, 2021 Location of impact in income statement Amortization of pension and OPEB items Amortization of net losses and prior service costs or credits $ (21) $ (62) Other (income) expense, net Less: Tax effect 4 12 Income tax expense $ (17) $ (50) Net of tax Gains on hedging activities Foreign exchange contracts $ (5) $ (23) Cost of sales Interest rate contracts (1) (4) Interest expense, net (6) (27) Total before tax Less: Tax effect 1 6 Income tax expense $ (5) $ (21) Net of tax Total reclassifications for the period $ (22) $ (71) Total net of tax |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUESRevenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30-90 days. Most of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our business segments. Our three legacy Baxter geographic segments include acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. Our legacy Hillrom segment includes smart bed systems; patient monitoring and diagnostic technologies; respiratory health devices; and advanced equipment for the surgical space. For most of those sales, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. To a lesser extent, we enter into arrangements for which revenue may be recognized over time. For example, our Americas segment includes contract manufacturing arrangements, our Hillrom segment includes digital and connected care solutions and collaboration tools that are implemented over time and all of our segments include equipment leases and certain subscription software and licensing arrangements. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed. As of September 30, 2022, we had $10.9 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of more than one year, which are primarily included in the Americas segment. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 10% of this amount as revenue over the remainder of 2022, 30% in each of 2023 and 2024, 15% in 2025 and 15% thereafter. Significant Judgments Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration primarily related to rebates and wholesaler chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accrued expenses and other current liabilities and accounts receivable, net on the condensed consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved. Revenue recognized during the three and nine months ended September 30, 2022 and 2021 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement. Contract Balances The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances and deposits (contract liabilities) on our condensed consolidated balance sheets. Net trade accounts receivable was $2.3 billion and $2.4 billion as of September 30, 2022 and December 31, 2021, respectively. For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for certain arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one contract asset becomes a trade account receivable as consumable medical products are delivered and billed, generally over one The following table summarizes our contract assets: (in millions) September 30, December 31, Contract manufacturing services $ 65 $ 50 Software sales 44 45 Bundled equipment and consumable medical products contracts 120 100 Contract assets $ 229 $ 195 The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets: (in millions) September 30, December 31, Prepaid expenses and other current assets $ 106 $ 84 Other non-current assets 123 111 Contract assets $ 229 $ 195 Accrued expenses and other current liabilities $ 158 $ 162 Other non-current liabilities 82 84 Contract liabilities $ 240 $ 246 Contract liabilities represent deferred revenues that arise as a result of cash received from customers or where the timing of billing for services precedes satisfaction of our performance obligations. Such remaining performance obligations represent the portion of the contract price for which work has not been performed and are primarily related to our installation and service contracts. We expect to satisfy the majority of the remaining performance obligations and recognize revenue related to installation and service contracts within the next 12 months with most of the non-current performance obligations satisfied within 24 months. The following table summarizes contract liability activity for the nine months ended September 30, 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations. Nine months ended Balance at beginning of period $ 246 New revenue deferrals 460 Revenue recognized upon satisfaction of performance obligations (463) Currency translation (3) Balance at end of period $ 240 During the nine months ended September 30, 2021, the amount of revenue recognized that was included in contract liabilities as of December 31, 2020 was not significant. Disaggregation of Net Sales In connection with our acquisition of Hillrom in December 2021, we added three new product categories: Patient Support Systems, Front Line Care and Surgical Solutions. The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international: Three Months Ended September 30, 2022 2021 (in millions) U.S. International Total U.S. International Total Renal Care 1 $ 240 $ 702 $ 942 $ 222 $ 759 $ 981 Medication Delivery 2 475 250 725 490 257 747 Pharmaceuticals 3 173 352 525 188 401 589 Clinical Nutrition 4 92 139 231 88 156 244 Advanced Surgery 5 141 106 247 135 114 249 Acute Therapies 6 53 105 158 69 116 185 BioPharma Solutions 7 99 73 172 109 97 206 Patient Support Systems 8 301 79 380 — — — Front Line Care 9 209 70 279 — — — Surgical Solutions 10 38 38 76 — — — Other 11 28 10 38 18 7 25 Total Baxter $ 1,849 $ 1,924 $ 3,773 $ 1,319 $ 1,907 $ 3,226 Nine Months Ended September 30, 2022 2021 (in millions) U.S. International Total U.S. International Total Renal Care 1 $ 690 $ 2,077 $ 2,767 $ 655 $ 2,212 $ 2,867 Medication Delivery 2 1,406 735 2,141 1,345 751 2,096 Pharmaceuticals 3 494 1,080 1,574 550 1,137 1,687 Clinical Nutrition 4 266 422 688 255 460 715 Advanced Surgery 5 428 310 738 405 317 722 Acute Therapies 6 179 340 519 211 369 580 BioPharma Solutions 7 226 265 491 218 306 524 Patient Support Systems 8 880 247 1,127 — — — Front Line Care 9 618 237 855 — — — Surgical Solutions 10 111 112 223 — — — Other 11 72 31 103 58 21 79 Total Baxter $ 5,370 $ 5,856 $ 11,226 $ 3,697 $ 5,573 $ 9,270 1 Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. 2 Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices. 3 Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. 4 Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products. 5 Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. 6 Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). 7 BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies. 8 Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies and smart beds. 9 Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment. 10 Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories. 11 Other includes sales of miscellaneous product and service offerings. Lease Revenue We lease smart beds, such as bariatric, critical care, maternal, and home care beds, as well as other surfaces, to customers during periods of peak demand or for specialty purposes. We also lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, IV fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices. The components of lease revenue for the three and nine months ended September 30, 2022 and 2021 were: (in millions) Three months ended September 30, 2022 Nine months ended September 30, 2022 Sales-type lease revenue $ 3 $ 11 Operating lease revenue 145 380 Variable lease revenue 9 41 Total lease revenue $ 157 $ 432 (in millions) Three months ended September 30, 2021 Nine months ended September 30, 2021 Sales-type lease revenue $ 3 $ 19 Operating lease revenue 21 90 Variable lease revenue 27 59 Total lease revenue $ 51 $ 168 Our net investment in sales-type leases was $95 million as of September 30, 2022, of which $18 million originated in 2018 and prior, $19 million in 2019, $26 million in 2020, $24 million in 2021, and $8 million in 2022. |
BUSINESS OPTIMIZATION CHARGES
BUSINESS OPTIMIZATION CHARGES | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
BUSINESS OPTIMIZATION CHARGES | BUSINESS OPTIMIZATION CHARGES In recent years, we have undertaken actions to transform our cost structure and enhance operational efficiency. These efforts include restructuring the organization, optimizing the manufacturing footprint, R&D operations and supply chain network, employing disciplined cost management, and centralizing and streamlining certain support functions. In the current period, restructuring charges include actions taken in connection with our integration of Hillrom. From the commencement of our business optimization activities in the second half of 2015 through September 30, 2022, we have incurred cumulative pre-tax costs of $1.4 billion related to these actions. The costs consisted primarily of employee termination costs, implementation costs, contract termination costs, asset impairments and accelerated depreciation. We currently expect to incur additional pre-tax costs, primarily related to implementation of business optimization programs, of approximately $14 million through the completion of initiatives that are currently underway. We continue to pursue cost savings initiatives, including those related to our integration of Hillrom, and, to the extent further cost savings opportunities are identified, we would incur additional restructuring charges and costs to implement business optimization programs in future periods. During the three and nine months ended September 30, 2022 and 2021, we recorded the following charges related to business optimization programs. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2022 2021 2022 2021 Restructuring charges $ 57 $ 32 $ 150 $ 67 Costs to implement business optimization programs 16 4 46 14 Total business optimization charges $ 73 $ 36 $ 196 $ 81 For segment reporting purposes, business optimization charges are unallocated expenses. Costs to implement business optimization programs for the three and nine months ended September 30, 2022 and 2021, respectively, consisted primarily of external consulting and transition costs, including employee compensation and related costs. These costs were primarily included within cost of sales and SG&A expense. During the three and nine months ended September 30, 2022 and 2021, we recorded the following restructuring charges. Three months ended September 30, 2022 (in millions) COGS SG&A R&D Total Employee termination costs $ 13 $ 36 $ 4 $ 53 Contract termination and other costs — 2 — 2 Asset impairments 1 1 — 2 Total restructuring charges $ 14 $ 39 $ 4 $ 57 Three months ended September 30, 2021 (in millions) COGS SG&A Total Employee termination costs $ 11 $ 8 $ 19 Contract termination and other costs — 2 2 Asset impairments 11 — 11 Total restructuring charges $ 22 $ 10 $ 32 Nine months ended September 30, 2022 (in millions) COGS SG&A R&D Total Employee termination costs $ 19 $ 99 $ 4 $ 122 Contract termination and other costs — 19 — 19 Asset impairments 1 8 — 9 Total restructuring charges $ 20 $ 126 $ 4 $ 150 Nine months ended September 30, 2021 (in millions) COGS SG&A Total Employee termination costs $ 35 $ 14 $ 49 Contract termination and other costs — 2 2 Asset impairments 16 — 16 Total restructuring charges $ 51 $ 16 $ 67 The following table summarizes activity in the liability related to our restructuring initiatives. (in millions) Liability balance as of December 31, 2021 $ 109 Charges 147 Payments (108) Reserve adjustments (6) Currency translation (14) Liability balance as of September 30, 2022 $ 128 Substantially all of our restructuring liabilities as of September 30, 2022 relate to employee termination costs, with the remaining liabilities attributable to contract termination costs. Substantially all of the cash payments for those liabilities are expected to be disbursed by the end of 2023. |
PENSION AND OTHER POSTRETIREMEN
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS | PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS The following is a summary of net periodic benefit cost relating to our pension and OPEB plans. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Pension benefits Service cost $ 19 $ 22 $ 59 $ 66 Interest cost 25 18 73 54 Expected return on plan assets (39) (36) (118) (108) Amortization of net losses and prior service costs 11 23 34 69 Net periodic pension cost $ 16 $ 27 $ 48 $ 81 OPEB Interest cost $ 1 $ 1 $ 3 $ 3 Amortization of net loss and prior service credit (3) (2) (9) (7) Net periodic OPEB cost (income) $ (2) $ (1) $ (6) $ (4) U.S. Hillrom Pension Plan Amendment |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective income tax rate was 1.1% and (0.2)% for the three months ended September 30, 2022 and 2021, respectively, and (1.1)% and 11.8% for the nine months ended September 30, 2022 and 2021, respectively. Our effective income tax rate can differ from the 21% U.S. federal statutory rate due to a number of factors, including foreign rate differences, tax incentives, non-deductible expenses, non-taxable income, increases or decreases in valuation allowances and liabilities for uncertain tax positions and excess tax benefits or shortfalls on stock compensation awards. For the three and nine months ended September 30, 2022, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to non-deductible goodwill impairments. For the three months ended September 30, 2021, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a $58 million tax benefit related to a tax-deductible foreign statutory loss on an investment in a foreign subsidiary, as well as changes related to our ability to realize tax credit carryforwards based on a favorable tax ruling in a foreign jurisdiction. For the nine months ended September 30, 2021, the difference between our effective income tax rate and the U.S. federal statutory rate was primarily attributable to a $58 million tax benefit related to a tax-deductible foreign statutory loss on an investment in a foreign subsidiary, as well as a favorable geographic earnings mix and changes related to our ability to realize tax credit carryforwards based on a favorable tax ruling in a foreign jurisdiction. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHAREThe numerator for both basic and diluted earnings per share (EPS) is net income (loss) attributable to Baxter stockholders. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method. The following table is a reconciliation of basic shares to diluted shares. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Basic shares 504 500 503 503 Effect of dilutive securities — 6 — 6 Diluted shares 504 506 503 509 Basic and diluted shares are the same for the three and nine months ended September 30, 2022 due to our net losses for those periods. The effect of dilutive securities for the three and nine months ended September 30, 2021 includes unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs. Diluted EPS excludes 23 million shares issuable under equity awards for the three and nine months ended September 30, 2022, respectively, and 7 million shares issuable under equity awards for the three and nine months ended September 30, 2021, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 7 for additional information regarding items impacting basic and diluted shares. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We operate on a global basis and are exposed to the risk that our earnings, cash flows and equity could be adversely impacted by fluctuations in foreign exchange and interest rates. Our hedging policy attempts to manage these risks to an acceptable level based on our judgment of the appropriate trade-off between risk, opportunity and costs. We are primarily exposed to foreign exchange risk with respect to recognized assets and liabilities, forecasted transactions and net assets denominated in the Euro, British Pound, Chinese Renminbi, Korean Won, Australian Dollar, Canadian Dollar, Japanese Yen, Colombian Peso, Brazilian Real, Mexican Peso, Turkish Lira, Indian Rupee and Swedish Krona. We manage our foreign currency exposures on a consolidated basis, which allows us to net exposures and take advantage of any natural offsets. In addition, we use derivative and nonderivative instruments to further reduce the net exposure to foreign exchange risk. Gains and losses on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings and equity volatility resulting from changes in foreign exchange rates. Financial market and currency volatility may limit our ability to cost-effectively hedge these exposures. We are also exposed to the risk that our earnings and cash flows could be adversely impacted by fluctuations in interest rates. Our policy is to manage interest costs using the mix of fixed- and floating-rate debt that we believe is appropriate at that time. To manage this mix in a cost-efficient manner, we periodically enter into interest rate swaps in which we agree to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional amount. We do not hold any instruments for trading purposes and none of our outstanding derivative instruments contain credit-risk-related contingent features. All derivative instruments are generally recognized as either assets or liabilities at fair value in the condensed consolidated balance sheets and are classified as short-term or long-term based on the scheduled maturity of the instrument. We designate certain of our derivatives and foreign-currency denominated debt as hedging instruments in cash flow, fair value or net investment hedges. Cash Flow Hed g es We may use options, including collars and purchased options, forwards and cross-currency swaps to hedge the foreign exchange risk to earnings relating to forecasted transactions and recognized assets and liabilities. We periodically use treasury rate locks to hedge the risk to earnings associated with movements in interest rates relating to anticipated issuances of debt. For each derivative instrument that is designated and effective as a cash flow hedge, the gain or loss on the derivative is recorded in AOCI and then recognized in earnings consistent with the underlying hedged item. Option premiums or net premiums paid are initially recorded as assets and reclassified to other comprehensive income (OCI) over the life of the option, and then recognized in earnings consistent with the underlying hedged item. Cash flow hedges are classified in cost of sales and interest expense, net, and are primarily related to forecasted intra-company sales denominated in foreign currencies and forecasted interest payments on anticipated issuances of debt, respectively. The notional amounts of foreign exchange contracts designated as cash flow hedges were $407 million and $377 million as of September 30, 2022 and December 31, 2021, respectively. The maximum term over which we have cash flow hedge contracts in place related to forecasted transactions at September 30, 2022 is 12 months for foreign exchange contracts. There were no outstanding interest rate contracts designated as cash flow hedges as of September 30, 2022 and December 31, 2021. Fair Value Hed g es We periodically use interest rate swaps to convert a portion of our fixed-rate debt into variable-rate debt. These instruments hedge our earnings from changes in the fair value of debt due to fluctuations in the designated benchmark interest rate. For each derivative instrument that is designated and effective as a fair value hedge, the gain or loss on the derivative is recognized immediately to earnings, and offsets changes in fair value attributable to a particular risk, such as changes in interest rates, of the hedged item, which are also recognized in earnings. Changes in the fair value of hedge instruments designated as fair value hedges are classified in interest expense, net, as they hedge the interest rate risk associated with certain of our fixed-rate debt. There were no outstanding interest rate contracts designated as fair value hedges as of September 30, 2022 and December 31, 2021. Net Investment Hed g es In May 2017, we issued €600 million of senior notes due May 2025. In May 2019, we issued €750 million of senior notes due May 2024 and €750 million of senior notes due May 2029. We have designated these debt obligations as hedges of our net investment in our European operations and, as a result, mark to spot rate adjustments on the outstanding debt balances are recorded as a component of AOCI. As of September 30, 2022, we had an accumulated pre-tax unrealized translation gain in AOCI of $265 million related to the Euro-denominated senior notes. Dedesignations If it is determined that a derivative or nonderivative hedging instrument is no longer highly effective as a hedge, we discontinue hedge accounting prospectively. Gains or losses relating to terminations of effective cash flow hedges generally continue to be deferred and are recognized consistent with the loss or income recognition of the underlying hedged items. However, if it is probable that the hedged forecasted transactions will not occur, any gains or losses would be immediately reclassified from AOCI to earnings. There were no hedge dedesignations in the first nine months of 2022 or 2021 resulting from changes in our assessment of the probability that the hedged forecasted transactions would occur. If we terminate a fair value hedge, an amount equal to the cumulative fair value adjustment to the hedged item at the date of termination is amortized to earnings over the remaining term of the hedged item. There were no fair value hedges terminated during the first nine months of 2022 or 2021. If we remove a net investment hedge designation, any gains or losses recognized in AOCI are not reclassified to earnings until we sell, liquidate, or deconsolidate the foreign investments that were being hedged. There were no net investment hedges terminated during the first nine months of 2022 or 2021. Undesignated Derivative Instruments We use forward contracts to hedge earnings from the effects of foreign exchange relating to certain of our intra-company and third-party receivables and payables denominated in a foreign currency. These derivative instruments are generally not formally designated as hedges and the terms of these instruments generally do not exceed one month. The total notional amount of undesignated derivative instruments was $548 million as of September 30, 2022 and $851 million as of December 31, 2021. Gains and Losses on Hedging Instruments and Undesignated Derivative Instruments The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended September 30, 2022 and 2021. Gain (loss) recognized in OCI Location of gain (loss) Gain (loss) reclassified from AOCI into income (in millions) 2022 2021 2022 2021 Cash flow hedges Interest rate contracts $ — $ — Interest expense, net $ (1) $ (1) Foreign exchange contracts 26 6 Cost of sales 6 (5) Net investment hedges 126 60 Other (income) expense, net — — Total $ 152 $ 66 $ 5 $ (6) Location of gain (loss) in income statement Gain (loss) recognized in income (in millions) 2022 2021 Undesignated derivative instruments Foreign exchange contracts Other (income) expense, net $ (11) $ (7) The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the nine months ended September 30, 2022 and 2021. Gain (loss) recognized in OCI Location of gain (loss) Gain (loss) reclassified from AOCI (in millions) 2022 2021 2022 2021 Cash flow hedges Interest rate contracts $ — $ — Interest expense, net $ (4) $ (4) Foreign exchange contracts 42 7 Cost of sales 11 (23) Net investment hedges 311 143 Other (income) expense, net — — Total $ 353 $ 150 $ 7 $ (27) Location of gain (loss) Gain (loss) recognized in income (in millions) 2022 2021 Undesignated derivative instruments Foreign exchange contracts Other (income) expense, net $ (34) $ (26) As of September 30, 2022, $22 million of deferred, net after-tax gains on derivative instruments included in AOCI are expected to be recognized in earnings during the next 12 months, coinciding with when the hedged items are expected to impact earnings. Derivative Assets and Liabilities The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of September 30, 2022. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Foreign exchange contracts Prepaid expenses and other current assets $ 31 Accrued expenses and other current liabilities $ — Total derivative instruments designated as hedges 31 — Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 4 Accrued expenses and other current liabilities 9 Total derivative instruments $ 35 $ 9 The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2021. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Foreign exchange contracts Prepaid expenses and other current assets $ 6 Accrued expenses and other current liabilities $ 3 Total derivative instruments designated as hedges 6 3 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 2 Accrued expenses and other current liabilities 2 Total derivative instruments $ 8 $ 5 While some of our derivatives are subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the condensed consolidated balance sheets. Additionally, we are not required to post collateral for any of our outstanding derivatives. The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty. September 30, 2022 December 31, 2021 (in millions) Asset Liability Asset Liability Gross amounts recognized in the condensed consolidated balance sheets $ 35 $ 9 $ 8 $ 5 Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet (7) (7) (2) (2) Total $ 28 $ 2 $ 6 $ 3 The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges: Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included (in millions) Balance as of September 30, 2022 Balance as of December 31, 2021 Balance as of September 30, 2022 Balance as of December 31, 2021 Long-term debt $ 101 $ 101 $ 4 $ 4 (a) These fair value hedges were terminated in 2018 and earlier periods. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis. Basis of fair value measurement (in millions) Balance as of September 30, 2022 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 35 $ — $ 35 $ — Available-for-sale debt securities 44 — — 44 Marketable equity securities 25 25 — — Total $ 104 $ 25 $ 35 $ 44 Liabilities Foreign exchange contracts $ 9 $ — $ 9 $ — Contingent payments related to acquisitions 90 — — 90 Total $ 99 $ — $ 9 $ 90 Basis of fair value measurement (in millions) Balance as of December 31, 2021 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 8 $ — $ 8 $ — Available-for-sale debt securities 30 — — 30 Marketable equity securities 10 10 — — Total $ 48 $ 10 $ 8 $ 30 Liabilities Foreign exchange contracts $ 5 $ — $ 5 $ — Contingent payments related to acquisitions 143 — — 143 Total $ 148 $ — $ 5 $ 143 As of September 30, 2022 and December 31, 2021, cash and cash equivalents of $1.6 billion and $3.0 billion, respectively, included money market and other short-term funds of approximately $161 million and $816 million, respectively, which are considered Level 2 in the fair value hierarchy. For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility. Available-for-sale debt securities, which consist of convertible debt and convertible redeemable preferred shares issued by nonpublic entities, are measured using discounted cash flow and option pricing models. Those available-for-sale debt securities are classified as Level 3 fair value measurements when there are no observable transactions near the balance sheet date due to the lack of observable data over certain fair value inputs such as equity volatility. The fair values of available-for-sale debt securities increase when interest rates decrease, equity volatility increases, or the fair values of the equity shares underlying the conversion options increase. Contingent payments related to acquisitions, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated. The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities. Three months ended September 30, 2022 2021 (in millions) Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Fair value at beginning of period $ 113 $ 44 $ 34 Additions — — 28 Change in fair value recognized in earnings (6) — (1) Payments (17) — — Fair value at end of period $ 90 $ 44 $ 61 Nine months ended September 30, 2022 2021 (in millions) Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Fair value at beginning of period $ 143 $ 30 $ 30 Additions — 21 52 Change in fair value recognized in earnings (34) — (6) Change in fair value recognized in AOCI — 3 — Payments (19) — (16) Transfers out of Level 3 — (10) — Currency translation — — 1 Fair value at end of period $ 90 $ 44 $ 61 During the nine months ended September 30, 2022, $8 million of available-for-sale debt securities that were previously classified as Level 3 converted to marketable equity securities, which are classified as Level 1 in the fair value hierarchy, upon the initial public offering of the investee. Financial Instruments Not Measured at Fair Value In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of September 30, 2022 and December 31, 2021. Book values Fair values(a) (in millions) 2022 2021 2022 2021 Liabilities Short-term debt $ 275 $ 301 $ 275 $ 301 Current maturities of long-term debt and finance lease obligations 4 210 4 212 Long-term debt and finance lease obligations 16,153 17,149 14,402 17,568 (a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs. The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments, such as accounts receivable and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities. Equity investments not measured at fair value are comprised of other equity investments without readily determinable fair values and were $102 million as of September 30, 2022 and $114 million as of December 31, 2021. Those investments are included in Other non-current assets on our condensed consolidated balance sheets. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION We manage our business based on four segments, consisting of the following geographic segments related to our legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a new global segment for the acquired Hillrom business. The Americas, EMEA and APAC segments provide a broad portfolio of essential healthcare products, including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. The Hillrom segment provides digital and connected care solutions and collaboration tools, including smart bed systems, patient monitoring and diagnostic technologies, respiratory health devices, and advanced equipment for the surgical space. We use operating income on a segment basis to make resource allocation decisions and assess the ongoing performance of our business segments. Intersegment sales are eliminated in consolidation. Certain items are maintained at Corporate and are not allocated to a segment. They primarily include corporate headquarters costs, certain R&D costs, manufacturing variances and centrally managed supply chain costs, product category support costs, stock compensation expense, certain employee benefit plan costs, and certain gains, losses, and other charges (such as business optimization, acquisition and integration costs, intangible asset amortization and asset impairments). For the period from our acquisition of Hillrom on December 13, 2021 through December 31, 2021, we previously included all costs incurred by the Hillrom business within that segment, including the types of costs described in the preceding sentence that are maintained at Corporate for our legacy Baxter segments. In connection with our ongoing integration activities, beginning in the first quarter 2022, we have updated the measure of profitability for our Hillrom segment by excluding such unallocated costs, consistent with our legacy Baxter segments. Those unallocated costs related to Hillrom, which totaled $3.0 billion and $3.3 billion for the three and nine months ended September 30, 2022, respectively, and primarily related to goodwill and intangible asset impairments are now presented within Corporate as well. Our chief operating decision maker does not receive any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Financial information for our segments is as follows. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Net sales: Americas $ 1,703 $ 1,727 $ 4,975 $ 4,911 EMEA 692 779 2,129 2,300 APAC 643 720 1,917 2,059 Hillrom 735 — 2,205 — Total net sales $ 3,773 $ 3,226 $ 11,226 $ 9,270 Operating income : Americas $ 588 $ 676 $ 1,765 $ 1,907 EMEA 145 167 433 461 APAC 152 166 459 456 Hillrom 215 — 564 — Total segment operating income $ 1,100 $ 1,009 $ 3,221 $ 2,824 The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Total segment operating income $ 1,100 $ 1,009 $ 3,221 $ 2,824 Corporate and other (3,899) (496) (5,517) (1,497) Total operating income (loss) (2,799) 513 (2,296) 1,327 Interest expense, net 104 50 278 118 Other (income) expense, net 63 12 3 15 Income (loss) before income taxes $ (2,966) $ 451 $ (2,577) $ 1,194 Refer to Note 9 for additional information on Net Sales by product category. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The unaudited interim condensed consolidated financial statements of Baxter International Inc. and its subsidiaries (we or our) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) in the United States have been condensed or omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Annual Report).In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. All such adjustments, unless otherwise noted herein, are of a normal, recurring nature. The results of operations for the current interim period are not necessarily indicative of the results of operations to be expected for the full year. |
Risks and Uncertainties Related to COVID-19 and Global Economic and Other Conditions | Risks and Uncertainties Related to COVID-19 and Global Economic and Other Conditions Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (COVID-19). COVID-19 has had, and we expect will continue to have, an adverse impact on our operations, supply chains and distribution systems and has increased and we expect will continue to increase our expenses. Over the course of the pandemic, our business has been impacted by shifting healthcare priorities and significant volatility in the demand for our products. For further information about our revenues by product category, refer to Note 9. Significant uncertainty remains regarding the duration and overall impact of the COVID-19 pandemic. Concerns remain regarding the pace of economic recovery due to virus resurgence across the globe from the Omicron variants, subvariants and other virus mutations as well as vaccine distribution and hesitancy. The U.S. and other governments may continue existing measures or implement new restrictions and other requirements in light of the continuing spread of the pandemic (including with respect to moratoriums on elective procedures and mandatory quarantines and travel restrictions), resulting in higher levels of absenteeism, including at our manufacturing and distribution facilities. Due to the uncertainty caused by the pandemic, our operating performance and financial results, particularly in the short term, may be subject to volatility. We have experienced significant challenges to our global supply chain in recent periods, including production delays and interruptions, increased costs and shortages of raw materials and component parts (including resins and electromechanical devices) and higher transportation costs, resulting from the pandemic and other exogenous factors including significant weather events, elevated inflation levels, disruptions to certain ports of call around the world, the war in Ukraine and other geopolitical events. We expect to experience some of these and other challenges related to our supply chain in future periods. These challenges, including the unavailability of certain raw materials and component parts, have also had a negative impact on our sales for certain product categories due to our inability to fully satisfy demand and may continue to have a negative impact on our sales in the future. |
New Accounting Standards | New Accounting Standards Recently adopted accounting pronouncements As of January 1, 2022, we adopted Accounting Standards Update (ASU) 2021-05, Leases (Topic 842), which requires a lessor to classify a lease with variable lease payments (that do not depend on an index or rate) as an operating lease if (1) the lease would have been classified as a sales-type or direct financing lease, and (2) the lessor would have recognized a selling loss at lease commencement. These changes are intended to avoid recognizing a day-one loss for a lease with variable payments even though the lessor expects the arrangement will be profitable overall. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements. |
ACQUISITIONS AND OTHER ARRANG_2
ACQUISITIONS AND OTHER ARRANGEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The following table summarizes the fair value of the total consideration paid: (in millions) Cash consideration paid to Hillrom shareholders (a) $ 10,474 Fair value of equity awards issued to Hillrom equity award holders (b) 2 Total Consideration $ 10,476 (a) Represents cash consideration transferred of $156.00 per outstanding Hillrom common share to existing shareholders and holders of equity awards that vested at closing pursuant to their original terms. (b) Represents the pre-acquisition service portion of the fair value of 668 thousand replacement restricted stock units issued to Hillrom equity award holders at closing. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date: (in millions) Assets acquired and liabilities assumed Cash and cash equivalents $ 399 Accounts receivable 562 Inventories 557 Prepaid expenses and other current assets 49 Property, plant and equipment 514 Goodwill 6,810 Other intangible assets 6,029 Operating lease right-of-use assets 74 Other non-current assets 132 Short-term debt (250) Accounts payable (140) Accrued expenses and other current liabilities (558) Long-term debt and finance lease obligations (2,118) Operating lease liabilities (57) Other non-current liabilities (1,527) Total assets acquired and liabilities assumed $ 10,476 |
SUPPLEMENTAL FINANCIAL INFORM_2
SUPPLEMENTAL FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The following table is a summary of the changes in our allowance for doubtful accounts for the three and nine months ended September 30, 2022 and 2021. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Balance at beginning of period $ 125 $ 117 $ 122 $ 125 Charged to costs and expenses 2 2 11 (1) Write-offs (2) (2) (4) (3) Currency translation adjustments (5) (2) (9) (6) Balance at end of period $ 120 $ 115 $ 120 $ 115 |
Inventories | Inventories (in millions) September 30, December 31, Raw materials $ 690 $ 591 Work in process 305 300 Finished goods 1,680 1,562 Inventories $ 2,675 $ 2,453 |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net (in millions) September 30, December 31, Property, plant and equipment, at cost $ 11,084 $ 11,728 Accumulated depreciation (6,285) (6,550) Property, plant and equipment, net $ 4,799 $ 5,178 |
Interest Expense, Net | Interest Expense, Net Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Interest expense, net of capitalized interest $ 109 $ 54 $ 290 $ 128 Interest income (5) (4) (12) (10) Interest expense, net $ 104 $ 50 $ 278 $ 118 |
Other (Income) Expense, Net | Other (Income) Expense, Net Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Foreign exchange (gains) losses, net $ — $ — $ (26) $ 5 Pension and other postretirement benefit plans (5) 4 (17) 11 Pension curtailment — — (11) — Change in fair value of marketable equity securities 3 9 (5) 2 Reclassification of cumulative translation loss to earnings 65 — 65 — Other, net — (1) (3) (3) Other (income) expense, net $ 63 $ 12 $ 3 $ 15 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The following is a reconciliation of goodwill by business segment. (in millions) Americas EMEA APAC Hillrom Total Balance as of December 31, 2021 $ 2,517 $ 309 $ 224 $ 6,786 $ 9,836 Acquisition accounting adjustments — — — 25 25 Impairments — — — (2,785) (2,785) Currency translation (241) (29) (22) (145) (437) Balance as of September 30, 2022 $ 2,276 $ 280 $ 202 $ 3,881 $ 6,639 |
Other Intangible Assets, Net | The following is a summary of our other intangible assets. Indefinite-lived intangible assets (in millions) Customer relationships Developed technology, including patents Other amortized intangible assets Trade names In process Research and Development Total September 30, 2022 Gross other intangible assets $ 3,447 $ 3,752 $ 310 $ 1,578 $ 213 $ 9,300 Accumulated amortization (410) (1,743) (220) — — (2,373) Other intangible assets, net $ 3,037 $ 2,009 $ 90 $ 1,578 $ 213 $ 6,927 December 31, 2021 Gross other intangible assets $ 3,437 $ 3,801 $ 344 $ 1,910 $ 230 $ 9,722 Accumulated amortization (162) (1,556) (212) — — (1,930) Other intangible assets, net $ 3,275 $ 2,245 $ 132 $ 1,910 $ 230 $ 7,792 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Summary of Changes in AOCI by Component | The following table is a net-of-tax summary of the changes in accumulated other comprehensive income (loss) (AOCI) by component for the nine months ended September 30, 2022 and 2021. (in millions) CTA Pension and OPEB plans Hedging activities Available-for-sale Debt securities Total Gains (losses) Balance as of December 31, 2021 $ (2,907) $ (347) $ (126) $ — $ (3,380) Other comprehensive income (loss) before reclassifications (816) 29 33 2 (752) Amounts reclassified from AOCI (a) 65 19 (6) — 78 Net other comprehensive income (loss) (751) 48 27 2 (674) Balance as of September 30, 2022 $ (3,658) $ (299) $ (99) $ 2 $ (4,054) (in millions) CTA Pension and OPEB plans Hedging activities Total Gains (losses) Balance as of December 31, 2020 $ (2,587) $ (574) $ (153) $ (3,314) Other comprehensive income (loss) before (257) 13 5 (239) Amounts reclassified from AOCI (a) — 50 21 71 Net other comprehensive income (loss) (257) 63 26 (168) Balance as of September 30, 2021 $ (2,844) $ (511) $ (127) $ (3,482) (a) See table below for details about these reclassifications. |
Summary of Reclassification from AOCI to Net Income | The following is a summary of the amounts reclassified from AOCI to net income during the three and nine months ended September 30, 2022 and 2021. Amounts reclassified from AOCI (a) (in millions) Three months ended September 30, 2022 Nine months ended Location of impact in income statement CTA Reclassification of cumulative translation loss to earnings $ (65) $ (65) Other (income) expense, net Less: Tax effect — — Income tax expense $ (65) $ (65) Net of tax Pension and OPEB items Amortization of net losses and prior service costs or credits $ (8) $ (25) Other (income) expense, net Less: Tax effect 2 6 Income tax expense $ (6) $ (19) Net of tax Gains (losses) on hedging activities Foreign exchange contracts $ 6 $ 11 Cost of sales Interest rate contracts (1) (4) Interest expense, net 5 7 Total before tax Less: Tax effect (1) (1) Income tax expense $ 4 $ 6 Net of tax Total reclassifications for the period $ (67) $ (78) Total net of tax (a) Amounts in parentheses indicate reductions to net income Amounts reclassified from AOCI (a) (in millions) Three months ended September 30, 2021 Nine months ended September 30, 2021 Location of impact in income statement Amortization of pension and OPEB items Amortization of net losses and prior service costs or credits $ (21) $ (62) Other (income) expense, net Less: Tax effect 4 12 Income tax expense $ (17) $ (50) Net of tax Gains on hedging activities Foreign exchange contracts $ (5) $ (23) Cost of sales Interest rate contracts (1) (4) Interest expense, net (6) (27) Total before tax Less: Tax effect 1 6 Income tax expense $ (5) $ (21) Net of tax Total reclassifications for the period $ (22) $ (71) Total net of tax |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Contract Asset | The following table summarizes our contract assets: (in millions) September 30, December 31, Contract manufacturing services $ 65 $ 50 Software sales 44 45 Bundled equipment and consumable medical products contracts 120 100 Contract assets $ 229 $ 195 The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets: (in millions) September 30, December 31, Prepaid expenses and other current assets $ 106 $ 84 Other non-current assets 123 111 Contract assets $ 229 $ 195 Accrued expenses and other current liabilities $ 158 $ 162 Other non-current liabilities 82 84 Contract liabilities $ 240 $ 246 The following table summarizes contract liability activity for the nine months ended September 30, 2022. The contract liability balance represents the transaction price allocated to the remaining performance obligations. Nine months ended Balance at beginning of period $ 246 New revenue deferrals 460 Revenue recognized upon satisfaction of performance obligations (463) Currency translation (3) Balance at end of period $ 240 |
Net Sales from Contracts with Customers by Global Business Unit | The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international: Three Months Ended September 30, 2022 2021 (in millions) U.S. International Total U.S. International Total Renal Care 1 $ 240 $ 702 $ 942 $ 222 $ 759 $ 981 Medication Delivery 2 475 250 725 490 257 747 Pharmaceuticals 3 173 352 525 188 401 589 Clinical Nutrition 4 92 139 231 88 156 244 Advanced Surgery 5 141 106 247 135 114 249 Acute Therapies 6 53 105 158 69 116 185 BioPharma Solutions 7 99 73 172 109 97 206 Patient Support Systems 8 301 79 380 — — — Front Line Care 9 209 70 279 — — — Surgical Solutions 10 38 38 76 — — — Other 11 28 10 38 18 7 25 Total Baxter $ 1,849 $ 1,924 $ 3,773 $ 1,319 $ 1,907 $ 3,226 Nine Months Ended September 30, 2022 2021 (in millions) U.S. International Total U.S. International Total Renal Care 1 $ 690 $ 2,077 $ 2,767 $ 655 $ 2,212 $ 2,867 Medication Delivery 2 1,406 735 2,141 1,345 751 2,096 Pharmaceuticals 3 494 1,080 1,574 550 1,137 1,687 Clinical Nutrition 4 266 422 688 255 460 715 Advanced Surgery 5 428 310 738 405 317 722 Acute Therapies 6 179 340 519 211 369 580 BioPharma Solutions 7 226 265 491 218 306 524 Patient Support Systems 8 880 247 1,127 — — — Front Line Care 9 618 237 855 — — — Surgical Solutions 10 111 112 223 — — — Other 11 72 31 103 58 21 79 Total Baxter $ 5,370 $ 5,856 $ 11,226 $ 3,697 $ 5,573 $ 9,270 1 Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services. 2 Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices. 3 Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services. 4 Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products. 5 Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention. 6 Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU). 7 BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies. 8 Patient Support Systems includes sales of our connected care solutions: devices, software, communications and integration technologies and smart beds. 9 Front Line Care includes sales of our integrated patient monitoring and diagnostic technologies to help diagnose, treat and manage a wide variety of illness and diseases, including respiratory therapy, cardiology, vision screening and physical assessment. 10 Surgical Solutions includes sales of our surgical video technologies, tables, lights, pendants, precision positioning devices and other accessories. 11 Other includes sales of miscellaneous product and service offerings. |
Sales-type Lease, Lease Income | The components of lease revenue for the three and nine months ended September 30, 2022 and 2021 were: (in millions) Three months ended September 30, 2022 Nine months ended September 30, 2022 Sales-type lease revenue $ 3 $ 11 Operating lease revenue 145 380 Variable lease revenue 9 41 Total lease revenue $ 157 $ 432 (in millions) Three months ended September 30, 2021 Nine months ended September 30, 2021 Sales-type lease revenue $ 3 $ 19 Operating lease revenue 21 90 Variable lease revenue 27 59 Total lease revenue $ 51 $ 168 |
Operating Lease, Lease Income | The components of lease revenue for the three and nine months ended September 30, 2022 and 2021 were: (in millions) Three months ended September 30, 2022 Nine months ended September 30, 2022 Sales-type lease revenue $ 3 $ 11 Operating lease revenue 145 380 Variable lease revenue 9 41 Total lease revenue $ 157 $ 432 (in millions) Three months ended September 30, 2021 Nine months ended September 30, 2021 Sales-type lease revenue $ 3 $ 19 Operating lease revenue 21 90 Variable lease revenue 27 59 Total lease revenue $ 51 $ 168 |
BUSINESS OPTIMIZATION CHARGES (
BUSINESS OPTIMIZATION CHARGES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | |
Summary of Business Optimization Charges | During the three and nine months ended September 30, 2022 and 2021, we recorded the following charges related to business optimization programs. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2022 2021 2022 2021 Restructuring charges $ 57 $ 32 $ 150 $ 67 Costs to implement business optimization programs 16 4 46 14 Total business optimization charges $ 73 $ 36 $ 196 $ 81 |
Components of Restructuring Charges | During the three and nine months ended September 30, 2022 and 2021, we recorded the following restructuring charges. Three months ended September 30, 2022 (in millions) COGS SG&A R&D Total Employee termination costs $ 13 $ 36 $ 4 $ 53 Contract termination and other costs — 2 — 2 Asset impairments 1 1 — 2 Total restructuring charges $ 14 $ 39 $ 4 $ 57 Three months ended September 30, 2021 (in millions) COGS SG&A Total Employee termination costs $ 11 $ 8 $ 19 Contract termination and other costs — 2 2 Asset impairments 11 — 11 Total restructuring charges $ 22 $ 10 $ 32 Nine months ended September 30, 2022 (in millions) COGS SG&A R&D Total Employee termination costs $ 19 $ 99 $ 4 $ 122 Contract termination and other costs — 19 — 19 Asset impairments 1 8 — 9 Total restructuring charges $ 20 $ 126 $ 4 $ 150 Nine months ended September 30, 2021 (in millions) COGS SG&A Total Employee termination costs $ 35 $ 14 $ 49 Contract termination and other costs — 2 2 Asset impairments 16 — 16 Total restructuring charges $ 51 $ 16 $ 67 |
Summary of Activity in Reserves Related to Restructuring Initiatives | The following table summarizes activity in the liability related to our restructuring initiatives. (in millions) Liability balance as of December 31, 2021 $ 109 Charges 147 Payments (108) Reserve adjustments (6) Currency translation (14) Liability balance as of September 30, 2022 $ 128 |
PENSION AND OTHER POSTRETIREM_2
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans | The following is a summary of net periodic benefit cost relating to our pension and OPEB plans. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Pension benefits Service cost $ 19 $ 22 $ 59 $ 66 Interest cost 25 18 73 54 Expected return on plan assets (39) (36) (118) (108) Amortization of net losses and prior service costs 11 23 34 69 Net periodic pension cost $ 16 $ 27 $ 48 $ 81 OPEB Interest cost $ 1 $ 1 $ 3 $ 3 Amortization of net loss and prior service credit (3) (2) (9) (7) Net periodic OPEB cost (income) $ (2) $ (1) $ (6) $ (4) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic Shares to Diluted Shares | The following table is a reconciliation of basic shares to diluted shares. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Basic shares 504 500 503 503 Effect of dilutive securities — 6 — 6 Diluted shares 504 506 503 509 |
DERIVATIVE INSTRUMENTS AND HE_2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Gains and Losses on Derivative Instruments | The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the three months ended September 30, 2022 and 2021. Gain (loss) recognized in OCI Location of gain (loss) Gain (loss) reclassified from AOCI into income (in millions) 2022 2021 2022 2021 Cash flow hedges Interest rate contracts $ — $ — Interest expense, net $ (1) $ (1) Foreign exchange contracts 26 6 Cost of sales 6 (5) Net investment hedges 126 60 Other (income) expense, net — — Total $ 152 $ 66 $ 5 $ (6) Location of gain (loss) in income statement Gain (loss) recognized in income (in millions) 2022 2021 Undesignated derivative instruments Foreign exchange contracts Other (income) expense, net $ (11) $ (7) The following tables summarize the gains and losses on our hedging instruments and the classification of those gains and losses within our condensed consolidated financial statements for the nine months ended September 30, 2022 and 2021. Gain (loss) recognized in OCI Location of gain (loss) Gain (loss) reclassified from AOCI (in millions) 2022 2021 2022 2021 Cash flow hedges Interest rate contracts $ — $ — Interest expense, net $ (4) $ (4) Foreign exchange contracts 42 7 Cost of sales 11 (23) Net investment hedges 311 143 Other (income) expense, net — — Total $ 353 $ 150 $ 7 $ (27) Location of gain (loss) Gain (loss) recognized in income (in millions) 2022 2021 Undesignated derivative instruments Foreign exchange contracts Other (income) expense, net $ (34) $ (26) |
Classification and Fair Values of Derivative Instruments | The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of September 30, 2022. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Foreign exchange contracts Prepaid expenses and other current assets $ 31 Accrued expenses and other current liabilities $ — Total derivative instruments designated as hedges 31 — Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 4 Accrued expenses and other current liabilities 9 Total derivative instruments $ 35 $ 9 The following table summarizes the classification and fair values of derivative instruments reported in the condensed consolidated balance sheet as of December 31, 2021. Derivatives in asset positions Derivatives in liability positions (in millions) Balance sheet location Fair value Balance sheet location Fair value Derivative instruments designated as hedges Foreign exchange contracts Prepaid expenses and other current assets $ 6 Accrued expenses and other current liabilities $ 3 Total derivative instruments designated as hedges 6 3 Undesignated derivative instruments Foreign exchange contracts Prepaid expenses and other current assets 2 Accrued expenses and other current liabilities 2 Total derivative instruments $ 8 $ 5 |
Derivative Positions Presented On Net Basis | The following table provides information on our derivative positions as if they were presented on a net basis, allowing for the right of offset by counterparty. September 30, 2022 December 31, 2021 (in millions) Asset Liability Asset Liability Gross amounts recognized in the condensed consolidated balance sheets $ 35 $ 9 $ 8 $ 5 Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet (7) (7) (2) (2) Total $ 28 $ 2 $ 6 $ 3 |
Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges | The following table presents the amounts recorded on the condensed consolidated balance sheet related to fair value hedges: Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included (in millions) Balance as of September 30, 2022 Balance as of December 31, 2021 Balance as of September 30, 2022 Balance as of December 31, 2021 Long-term debt $ 101 $ 101 $ 4 $ 4 (a) These fair value hedges were terminated in 2018 and earlier periods. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis. Basis of fair value measurement (in millions) Balance as of September 30, 2022 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 35 $ — $ 35 $ — Available-for-sale debt securities 44 — — 44 Marketable equity securities 25 25 — — Total $ 104 $ 25 $ 35 $ 44 Liabilities Foreign exchange contracts $ 9 $ — $ 9 $ — Contingent payments related to acquisitions 90 — — 90 Total $ 99 $ — $ 9 $ 90 Basis of fair value measurement (in millions) Balance as of December 31, 2021 Quoted prices in active markets for identical assets Significant other Significant Assets Foreign exchange contracts $ 8 $ — $ 8 $ — Available-for-sale debt securities 30 — — 30 Marketable equity securities 10 10 — — Total $ 48 $ 10 $ 8 $ 30 Liabilities Foreign exchange contracts $ 5 $ — $ 5 $ — Contingent payments related to acquisitions 143 — — 143 Total $ 148 $ — $ 5 $ 143 |
Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs | The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions and available-for-sale debt securities. Three months ended September 30, 2022 2021 (in millions) Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Fair value at beginning of period $ 113 $ 44 $ 34 Additions — — 28 Change in fair value recognized in earnings (6) — (1) Payments (17) — — Fair value at end of period $ 90 $ 44 $ 61 Nine months ended September 30, 2022 2021 (in millions) Contingent payments related to acquisitions Available-for-sale debt securities Contingent payments related to acquisitions Fair value at beginning of period $ 143 $ 30 $ 30 Additions — 21 52 Change in fair value recognized in earnings (34) — (6) Change in fair value recognized in AOCI — 3 — Payments (19) — (16) Transfers out of Level 3 — (10) — Currency translation — — 1 Fair value at end of period $ 90 $ 44 $ 61 |
Book Values and Fair Values of Financial Instruments | the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of September 30, 2022 and December 31, 2021. Book values Fair values(a) (in millions) 2022 2021 2022 2021 Liabilities Short-term debt $ 275 $ 301 $ 275 $ 301 Current maturities of long-term debt and finance lease obligations 4 210 4 212 Long-term debt and finance lease obligations 16,153 17,149 14,402 17,568 (a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Summary of Financial Information for Our Segments | Financial information for our segments is as follows. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Net sales: Americas $ 1,703 $ 1,727 $ 4,975 $ 4,911 EMEA 692 779 2,129 2,300 APAC 643 720 1,917 2,059 Hillrom 735 — 2,205 — Total net sales $ 3,773 $ 3,226 $ 11,226 $ 9,270 Operating income : Americas $ 588 $ 676 $ 1,765 $ 1,907 EMEA 145 167 433 461 APAC 152 166 459 456 Hillrom 215 — 564 — Total segment operating income $ 1,100 $ 1,009 $ 3,221 $ 2,824 |
Operating Income to Income Before Income Taxes Reconciliation | The following is a reconciliation of segment operating income to income before income taxes per the condensed consolidated statements of income. Three months ended Nine months ended (in millions) 2022 2021 2022 2021 Total segment operating income $ 1,100 $ 1,009 $ 3,221 $ 2,824 Corporate and other (3,899) (496) (5,517) (1,497) Total operating income (loss) (2,799) 513 (2,296) 1,327 Interest expense, net 104 50 278 118 Other (income) expense, net 63 12 3 15 Income (loss) before income taxes $ (2,966) $ 451 $ (2,577) $ 1,194 |
ACQUISITIONS AND OTHER ARRANG_3
ACQUISITIONS AND OTHER ARRANGEMENTS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Dec. 13, 2021 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Acquisition accounting adjustments | $ 25 | |
Hillrom | ||
Business Acquisition [Line Items] | ||
Total Consideration | $ 10,476 | |
Enterprise value | $ 12,800 | |
Cash consideration transferred (in usd per share) | $ 156 | |
Acquisition accounting adjustments | 25 | |
Incremental costs of sales | $ 159 |
ACQUISITIONS AND OTHER ARRANG_4
ACQUISITIONS AND OTHER ARRANGEMENTS - Schedule of Total Consideration for Hillrom (Details) - Hillrom $ / shares in Units, shares in Thousands, $ in Millions | Dec. 13, 2021 USD ($) $ / shares shares |
Acquisitions And Collaborations [Line Items] | |
Cash consideration paid to Hillrom shareholders | $ 10,474 |
Fair value of equity awards issued to Hillrom equity award holders | 2 |
Total Consideration | $ 10,476 |
Cash consideration transferred (in usd per share) | $ / shares | $ 156 |
Business acquisition, equity interest issued or issuable (in shares) | shares | 668 |
ACQUISITIONS AND OTHER ARRANG_5
ACQUISITIONS AND OTHER ARRANGEMENTS - Summary of Fair Value of Assets Acquired and Liabilities Assumed for Hillrom (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 13, 2021 |
Acquisitions And Collaborations [Line Items] | |||
Goodwill | $ 6,639 | $ 9,836 | |
Hillrom | |||
Acquisitions And Collaborations [Line Items] | |||
Cash and cash equivalents | $ 399 | ||
Accounts receivable | 562 | ||
Inventories | 557 | ||
Prepaid expenses and other current assets | 49 | ||
Property, plant and equipment | 514 | ||
Goodwill | 6,810 | ||
Other intangible assets | 6,029 | ||
Operating lease right-of-use assets | 74 | ||
Other non-current assets | 132 | ||
Short-term debt | (250) | ||
Accounts payable | (140) | ||
Accrued expenses and other current liabilities | (558) | ||
Long-term debt and finance lease obligations | (2,118) | ||
Operating lease liabilities | (57) | ||
Other non-current liabilities | (1,527) | ||
Total assets acquired and liabilities assumed | $ 10,476 |
ACQUISITIONS AND OTHER ARRANG_6
ACQUISITIONS AND OTHER ARRANGEMENTS - Other Business Development Activities (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2020 | |
Licensing Agreements | Celerity | |||
Business Acquisition [Line Items] | |||
Proceeds from divestiture of product rights | $ 1 | ||
Loss on product divestiture arrangement | $ 54 | ||
Zosyn | |||
Business Acquisition [Line Items] | |||
Acquisition price | $ 122 | ||
Zosyn | Developed Technology Intangible Asset | |||
Business Acquisition [Line Items] | |||
Weighted-average useful life | 9 years |
SUPPLEMENTAL FINANCIAL INFORM_3
SUPPLEMENTAL FINANCIAL INFORMATION - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Balance at beginning of period | $ 125 | $ 117 | $ 122 | $ 125 |
Charged to costs and expenses | 2 | 2 | 11 | (1) |
Write-offs | (2) | (2) | (4) | (3) |
Currency translation adjustments | (5) | (2) | (9) | (6) |
Balance at end of period | $ 120 | $ 115 | $ 120 | $ 115 |
SUPPLEMENTAL FINANCIAL INFORM_4
SUPPLEMENTAL FINANCIAL INFORMATION - Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 690 | $ 591 |
Work in process | 305 | 300 |
Finished goods | 1,680 | 1,562 |
Inventories | $ 2,675 | $ 2,453 |
SUPPLEMENTAL FINANCIAL INFORM_5
SUPPLEMENTAL FINANCIAL INFORMATION - Property, Plant and Equipment, Net (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Property, plant and equipment, at cost | $ 11,084 | $ 11,728 |
Accumulated depreciation | (6,285) | (6,550) |
Property, plant and equipment, net | $ 4,799 | $ 5,178 |
SUPPLEMENTAL FINANCIAL INFORM_6
SUPPLEMENTAL FINANCIAL INFORMATION - Interest Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Interest Income Expense Net | ||||
Interest expense, net of capitalized interest | $ 109 | $ 54 | $ 290 | $ 128 |
Interest income | (5) | (4) | (12) | (10) |
Interest expense, net | $ 104 | $ 50 | $ 278 | $ 118 |
SUPPLEMENTAL FINANCIAL INFORM_7
SUPPLEMENTAL FINANCIAL INFORMATION - Other Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Other Income, net | ||||
Foreign exchange (gains) losses, net | $ 0 | $ 0 | $ (26) | $ 5 |
Pension and other postretirement benefit plans | (5) | 4 | (17) | 11 |
Pension curtailment | 0 | 0 | (11) | 0 |
Change in fair value of marketable equity securities | 3 | 9 | (5) | 2 |
Reclassification of cumulative translation loss to earnings | 65 | 0 | 65 | 0 |
Other, net | 0 | (1) | (3) | (3) |
Other (income) expense, net | $ 63 | $ 12 | $ 3 | $ 15 |
SUPPLEMENTAL FINANCIAL INFORM_8
SUPPLEMENTAL FINANCIAL INFORMATION - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Reclassification of cumulative translation loss to earnings | $ 65 | ||
Right-of-use asset obtained in exchange for operating lease liability | $ 59 | $ 69 | |
Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Capital expenditures incurred but not yet paid | 65 | $ 49 | |
Geographic Basis, Corporate Headquarters | Disposal Group, Not Discontinued Operations | |||
Property, Plant and Equipment [Line Items] | |||
Agreed purchase price | $ 52 | $ 52 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 9,836 | |||
Acquisition accounting adjustments | 25 | |||
Goodwill impairments | $ (2,785) | $ 0 | (2,785) | $ 0 |
Currency translation | (437) | |||
Goodwill, ending balance | 6,639 | 6,639 | ||
Americas | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 2,517 | |||
Acquisition accounting adjustments | 0 | |||
Goodwill impairments | 0 | |||
Currency translation | (241) | |||
Goodwill, ending balance | 2,276 | 2,276 | ||
EMEA | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 309 | |||
Acquisition accounting adjustments | 0 | |||
Goodwill impairments | 0 | |||
Currency translation | (29) | |||
Goodwill, ending balance | 280 | 280 | ||
APAC | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 224 | |||
Acquisition accounting adjustments | 0 | |||
Goodwill impairments | 0 | |||
Currency translation | (22) | |||
Goodwill, ending balance | 202 | 202 | ||
Hillrom | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 6,786 | |||
Acquisition accounting adjustments | 25 | |||
Goodwill impairments | (2,785) | |||
Currency translation | (145) | |||
Goodwill, ending balance | $ 3,881 | $ 3,881 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Dec. 13, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Goodwill [Line Items] | ||||||
Goodwill | $ 6,639 | $ 6,639 | $ 9,836 | |||
Goodwill impairments | 2,785 | $ 0 | 2,785 | $ 0 | ||
Intangible asset amortization expense | 168 | $ 68 | $ 578 | $ 199 | ||
Patient Support Systems Reporting Unit | ||||||
Goodwill [Line Items] | ||||||
Goodwill impairments | 1,400 | |||||
Front Line Care Reporting Unit | ||||||
Goodwill [Line Items] | ||||||
Goodwill impairments | 1,000 | |||||
Surgical Solutions Reporting Unit | ||||||
Goodwill [Line Items] | ||||||
Goodwill impairments | 400 | |||||
Hillrom | ||||||
Goodwill [Line Items] | ||||||
Goodwill | $ 6,810 | |||||
Other intangible assets | 6,029 | |||||
Indefinite-lived intangible assets acquired | $ 1,900 | |||||
Goodwill impairments | 2,800 | |||||
Hillrom | Trade names | ||||||
Goodwill [Line Items] | ||||||
Impairment of intangible assets, indefinite-lived | $ 332 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Other Intangible Assets, Net (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets | $ 9,300 | $ 9,722 |
Finite-Lived Intangible Assets, Accumulated Amortization | (2,373) | (1,930) |
Other intangible assets, net | 6,927 | 7,792 |
Trade names | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Indefinite-lived intangible assets | 1,578 | 1,910 |
In process Research and Development | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Indefinite-lived intangible assets | 213 | 230 |
Customer relationships | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets, finite-lived | 3,447 | 3,437 |
Finite-Lived Intangible Assets, Accumulated Amortization | (410) | (162) |
Other intangible assets, net, finite-lived | 3,037 | 3,275 |
Developed technology, including patents | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets, finite-lived | 3,752 | 3,801 |
Finite-Lived Intangible Assets, Accumulated Amortization | (1,743) | (1,556) |
Other intangible assets, net, finite-lived | 2,009 | 2,245 |
Other amortized intangible assets | ||
Intangible Asset Excluding Goodwill [Line Items] | ||
Gross other intangible assets, finite-lived | 310 | 344 |
Finite-Lived Intangible Assets, Accumulated Amortization | (220) | (212) |
Other intangible assets, net, finite-lived | $ 90 | $ 132 |
FINANCING ARRANGEMENTS (Details
FINANCING ARRANGEMENTS (Details) € in Millions | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Aug. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2022 EUR (€) | |
Debt Instrument [Line Items] | |||||
Repayments of debt | $ 953,000,000 | $ 407,000,000 | |||
Commercial paper, average outstanding | $ 300,000,000 | ||||
Original weighted-average term | 88 days | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit, current borrowing capacity | 2,500,000,000 | € 200 | |||
Borrowings outstanding | 0 | $ 0 | |||
Commercial Paper | |||||
Debt Instrument [Line Items] | |||||
Commercial paper, average outstanding | $ 275,000,000 | ||||
Weighted average interest rate | 3.02% | 0.27% | 3.02% | ||
Original weighted-average term | 49 days | ||||
Senior Three Year Term Loan | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Repayments of debt | $ 335,000,000 | ||||
Senior notes | $ 2,000,000,000 | ||||
Weighted-average term | 3 years | 3 years | |||
Senior Five Year Term Loan | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Repayments of debt | $ 355,000,000 | ||||
Senior notes | $ 2,000,000,000 | ||||
Weighted-average term | 5 years | 5 years | |||
2.4% Senior Notes Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Repayments of debt | $ 203,000,000 | ||||
Senior notes, interest rate | 2.40% | ||||
0.868% Senior Notes Due May 2023 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 800,000,000 | ||||
Senior notes, interest rate | 0.868% | ||||
1.322% Senior Notes Due 2024 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 1,400,000,000 | ||||
Senior notes, interest rate | 1.322% | ||||
1.915% Debentures Due 2027 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 1,450,000,000 | ||||
Senior notes, interest rate | 1.915% | ||||
2.272% Senior Notes Due 2028 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 1,250,000,000 | ||||
Senior notes, interest rate | 2.272% | ||||
2.539% Senior Notes Due 2032 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 1,550,000,000 | ||||
Senior notes, interest rate | 2.539% | ||||
3.132% Senior Notes Due 2051 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 750,000,000 | ||||
Senior notes, interest rate | 3.132% | ||||
Floating-rate Notes Due 2023 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 300,000,000 | ||||
Floating-rate Notes Due 2024 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Senior notes | $ 300,000,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 9 Months Ended | ||||
Feb. 18, 2022 USD ($) | Jan. 12, 2021 USD ($) | Sep. 30, 2022 USD ($) site | Dec. 31, 2021 USD ($) | Mar. 31, 2020 lawsuit | |
Loss Contingencies [Line Items] | |||||
Litigation reserve | $ 31 | $ 72 | |||
Agreement to settle the case | $ 16 | ||||
Civil settlement amount | $ 18 | ||||
Number of lawsuits | lawsuit | 2 | ||||
Superfund Sites | Environmental Clean-up | |||||
Loss Contingencies [Line Items] | |||||
Number of sites | site | 6 | ||||
Environmental reserves | $ 17 | $ 18 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Billions | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Oct. 31, 2020 | Nov. 30, 2018 | Feb. 28, 2018 | Nov. 30, 2016 | Jul. 31, 2012 | |
Share-Based Payment Arrangement [Abstract] | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.29 | $ 0.280 | $ 0.86 | $ 0.805 | |||||
Stock repurchase program, authorized amount | $ 2 | ||||||||
Stock repurchase program, additional authorized amount | $ 1.5 | $ 2 | $ 1.5 | $ 1.5 | |||||
Purchases of treasury stock (in shares) | 0.5 | 7.3 | |||||||
Remaining value available under stock repurchase programs | $ 1.3 | $ 1.3 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME - Summary of Changes in AOCI by Component (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Gains (losses) | ||||
Balance, beginning of period (in usd) | $ 8,903 | $ 8,535 | $ 9,121 | $ 8,726 |
Other comprehensive income (loss) before reclassifications | (752) | (239) | ||
Amounts reclassified from AOCI | 78 | 71 | ||
Net other comprehensive income (loss) | (287) | (106) | (674) | (168) |
Balance, end of period (in usd) | 5,579 | 8,815 | 5,579 | 8,815 |
CTA | ||||
Gains (losses) | ||||
Balance, beginning of period (in usd) | (2,907) | (2,587) | ||
Other comprehensive income (loss) before reclassifications | (816) | (257) | ||
Amounts reclassified from AOCI | 65 | 0 | ||
Net other comprehensive income (loss) | (751) | (257) | ||
Balance, end of period (in usd) | (3,658) | (2,844) | (3,658) | (2,844) |
Pension and OPEB plans | ||||
Gains (losses) | ||||
Balance, beginning of period (in usd) | (347) | (574) | ||
Other comprehensive income (loss) before reclassifications | 29 | 13 | ||
Amounts reclassified from AOCI | 19 | 50 | ||
Net other comprehensive income (loss) | 48 | 63 | ||
Balance, end of period (in usd) | (299) | (511) | (299) | (511) |
Hedging activities | ||||
Gains (losses) | ||||
Balance, beginning of period (in usd) | (126) | (153) | ||
Other comprehensive income (loss) before reclassifications | 33 | 5 | ||
Amounts reclassified from AOCI | (6) | 21 | ||
Net other comprehensive income (loss) | 27 | 26 | ||
Balance, end of period (in usd) | (99) | (127) | (99) | (127) |
Available-for-sale Debt securities | ||||
Gains (losses) | ||||
Balance, beginning of period (in usd) | 0 | |||
Other comprehensive income (loss) before reclassifications | 2 | |||
Amounts reclassified from AOCI | 0 | |||
Net other comprehensive income (loss) | 2 | |||
Balance, end of period (in usd) | 2 | 2 | ||
Total | ||||
Gains (losses) | ||||
Balance, beginning of period (in usd) | (3,380) | (3,314) | ||
Balance, end of period (in usd) | $ (4,054) | $ (3,482) | $ (4,054) | $ (3,482) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME - Summary of Amounts Reclassification from AOCI to Net Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other (income) expense, net | $ (63) | $ (12) | $ (3) | $ (15) |
Income tax expense | 32 | 1 | (29) | (141) |
Cost of sales | (2,640) | (1,905) | (7,292) | (5,571) |
Total before tax | (2,966) | 451 | (2,577) | 1,194 |
Total net of tax | (2,937) | 450 | (2,614) | 1,046 |
Amounts reclassified from AOCI | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Total net of tax | (67) | (22) | (78) | (71) |
Amounts reclassified from AOCI | Pension and OPEB items | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other (income) expense, net | (8) | (21) | (25) | (62) |
Income tax expense | 2 | 4 | 6 | 12 |
Total net of tax | (6) | (17) | (19) | (50) |
Amounts reclassified from AOCI | Gains (losses) on hedging activities | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Income tax expense | (1) | 1 | (1) | 6 |
Total before tax | 5 | (6) | 7 | (27) |
Total net of tax | 4 | (5) | 6 | (21) |
Amounts reclassified from AOCI | Gains (losses) on hedging activities | Foreign exchange contracts | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Cost of sales | 6 | (5) | 11 | (23) |
Amounts reclassified from AOCI | Gains (losses) on hedging activities | Interest rate contracts | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense, net | (1) | $ (1) | (4) | $ (4) |
Amounts reclassified from AOCI | CTA | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Other (income) expense, net | (65) | (65) | ||
Income tax expense | 0 | 0 | ||
Total net of tax | $ (65) | $ (65) |
REVENUES - Additional Informati
REVENUES - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | ||||
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue From Contract With Customer [Line Items] | |||||
Transaction price allocated to remaining performance obligations | $ 10,900 | ||||
Net trade accounts receivable | 2,300 | $ 2,400 | |||
Sales-type lease, net of investment in lease | 95 | ||||
Sales-type leases, receivables | $ 8 | $ 24 | $ 26 | $ 19 | $ 18 |
Minimum | |||||
Revenue From Contract With Customer [Line Items] | |||||
Global payment terms | 30 days | ||||
Minimum | Software sales | |||||
Revenue From Contract With Customer [Line Items] | |||||
Revenue recognized contract period | 1 year | ||||
Minimum | Consumable Medical Products | |||||
Revenue From Contract With Customer [Line Items] | |||||
Revenue recognized contract period | 1 year | ||||
Maximum | |||||
Revenue From Contract With Customer [Line Items] | |||||
Global payment terms | 90 days | ||||
Maximum | Contract manufacturing services | |||||
Revenue From Contract With Customer [Line Items] | |||||
Revenue recognized contract period | 90 days | ||||
Maximum | Software sales | |||||
Revenue From Contract With Customer [Line Items] | |||||
Revenue recognized contract period | 5 years | ||||
Maximum | Consumable Medical Products | |||||
Revenue From Contract With Customer [Line Items] | |||||
Revenue recognized contract period | 7 years | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-10-01 | |||||
Revenue From Contract With Customer [Line Items] | |||||
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 10% | ||||
Remaining performance obligations period | 3 months | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01 | |||||
Revenue From Contract With Customer [Line Items] | |||||
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 30% | ||||
Remaining performance obligations period | 1 year | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |||||
Revenue From Contract With Customer [Line Items] | |||||
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 30% | ||||
Remaining performance obligations period | 1 year | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |||||
Revenue From Contract With Customer [Line Items] | |||||
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 15% | ||||
Remaining performance obligations period | 1 year | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01 | |||||
Revenue From Contract With Customer [Line Items] | |||||
Remaining revenue performance obligation, percentage of revenue expected to be recognized | 15% | ||||
Remaining performance obligations period |
REVENUES - Contract Assets and
REVENUES - Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Revenue From Contract With Customer [Line Items] | ||
Contract assets | $ 229 | $ 195 |
Contract liabilities | 240 | 246 |
Revenue From Contract With Customer [Roll Forward] | ||
Balance at beginning of period | 246 | |
New revenue deferrals | 460 | |
Revenue recognized upon satisfaction of performance obligations | (463) | |
Currency translation | (3) | |
Balance at end of period | 240 | |
Prepaid expenses and other current assets | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | 106 | 84 |
Other non-current assets | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | 123 | 111 |
Accrued expenses and other current liabilities | ||
Revenue From Contract With Customer [Line Items] | ||
Contract liabilities | 158 | 162 |
Revenue From Contract With Customer [Roll Forward] | ||
Balance at beginning of period | 162 | |
Balance at end of period | 158 | |
Other non-current liabilities | ||
Revenue From Contract With Customer [Line Items] | ||
Contract liabilities | 82 | 84 |
Revenue From Contract With Customer [Roll Forward] | ||
Balance at beginning of period | 84 | |
Balance at end of period | 82 | |
Contract manufacturing services | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | 65 | 50 |
Software sales | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | 44 | 45 |
Bundled equipment and consumable medical products contracts | ||
Revenue From Contract With Customer [Line Items] | ||
Contract assets | $ 120 | $ 100 |
REVENUES - Net Sales from Contr
REVENUES - Net Sales from Contracts with Customers by Global Business Unit (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue From Contract With Customer [Line Items] | ||||
Net sales | $ 3,773 | $ 3,226 | $ 11,226 | $ 9,270 |
U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 1,849 | 1,319 | 5,370 | 3,697 |
International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 1,924 | 1,907 | 5,856 | 5,573 |
Renal Care | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 942 | 981 | 2,767 | 2,867 |
Renal Care | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 240 | 222 | 690 | 655 |
Renal Care | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 702 | 759 | 2,077 | 2,212 |
Medication Delivery | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 725 | 747 | 2,141 | 2,096 |
Medication Delivery | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 475 | 490 | 1,406 | 1,345 |
Medication Delivery | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 250 | 257 | 735 | 751 |
Pharmaceuticals | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 525 | 589 | 1,574 | 1,687 |
Pharmaceuticals | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 173 | 188 | 494 | 550 |
Pharmaceuticals | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 352 | 401 | 1,080 | 1,137 |
Clinical Nutrition | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 231 | 244 | 688 | 715 |
Clinical Nutrition | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 92 | 88 | 266 | 255 |
Clinical Nutrition | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 139 | 156 | 422 | 460 |
Advanced Surgery | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 247 | 249 | 738 | 722 |
Advanced Surgery | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 141 | 135 | 428 | 405 |
Advanced Surgery | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 106 | 114 | 310 | 317 |
Acute Therapies | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 158 | 185 | 519 | 580 |
Acute Therapies | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 53 | 69 | 179 | 211 |
Acute Therapies | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 105 | 116 | 340 | 369 |
BioPharma Solutions | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 172 | 206 | 491 | 524 |
BioPharma Solutions | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 99 | 109 | 226 | 218 |
BioPharma Solutions | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 73 | 97 | 265 | 306 |
Patient Support Systems | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 380 | 0 | 1,127 | 0 |
Patient Support Systems | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 301 | 0 | 880 | 0 |
Patient Support Systems | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 79 | 0 | 247 | 0 |
Front Line Care | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 279 | 0 | 855 | 0 |
Front Line Care | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 209 | 0 | 618 | 0 |
Front Line Care | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 70 | 0 | 237 | 0 |
Surgical Solutions | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 76 | 0 | 223 | 0 |
Surgical Solutions | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 38 | 0 | 111 | 0 |
Surgical Solutions | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 38 | 0 | 112 | 0 |
Other | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 38 | 25 | 103 | 79 |
Other | U.S. | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | 28 | 18 | 72 | 58 |
Other | International | ||||
Revenue From Contract With Customer [Line Items] | ||||
Net sales | $ 10 | $ 7 | $ 31 | $ 21 |
REVENUES - Lease Revenue (Detai
REVENUES - Lease Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | ||||
Sales-type lease revenue | $ 3 | $ 3 | $ 11 | $ 19 |
Operating lease revenue | 145 | 21 | 380 | 90 |
Variable lease revenue | 9 | 27 | 41 | 59 |
Total lease revenue | $ 157 | $ 51 | $ 432 | $ 168 |
BUSINESS OPTIMIZATION CHARGES -
BUSINESS OPTIMIZATION CHARGES - Additional Information (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Restructuring and Related Activities [Abstract] | |
Cumulative pre-tax costs incurred | $ 1,400 |
Expected additional pre-tax costs | $ 14 |
BUSINESS OPTIMIZATION CHARGES_2
BUSINESS OPTIMIZATION CHARGES - Summary of Business Optimization Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 57 | $ 32 | $ 150 | $ 67 |
Business Optimization Programs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 57 | 32 | 150 | 67 |
Costs to implement business optimization programs | 16 | 4 | 46 | 14 |
Total business optimization charges | $ 73 | $ 36 | $ 196 | $ 81 |
BUSINESS OPTIMIZATION CHARGES_3
BUSINESS OPTIMIZATION CHARGES - Components of Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 57 | $ 32 | $ 150 | $ 67 |
COGS | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 14 | 22 | 20 | 51 |
SG&A | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 39 | 10 | 126 | 16 |
R&D | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 4 | 4 | ||
Employee termination costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 53 | 19 | 122 | 49 |
Employee termination costs | COGS | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 13 | 11 | 19 | 35 |
Employee termination costs | SG&A | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 36 | 8 | 99 | 14 |
Employee termination costs | R&D | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 4 | 4 | ||
Contract termination and other costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 2 | 2 | 19 | 2 |
Contract termination and other costs | COGS | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 0 | 0 | 0 | 0 |
Contract termination and other costs | SG&A | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 2 | 2 | 19 | 2 |
Contract termination and other costs | R&D | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 0 | 0 | ||
Asset impairments | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 2 | 11 | 9 | 16 |
Asset impairments | COGS | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1 | 11 | 1 | 16 |
Asset impairments | SG&A | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1 | $ 0 | 8 | $ 0 |
Asset impairments | R&D | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 0 | $ 0 |
BUSINESS OPTIMIZATION CHARGES_4
BUSINESS OPTIMIZATION CHARGES - Summary of Activity in Reserves Related to Restructuring Initiatives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restructuring Reserve [Roll Forward] | ||||
Charges | $ 57 | $ 32 | $ 150 | $ 67 |
Severance and Other Employee Related Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Reserve, beginning balance | 109 | |||
Charges | 147 | |||
Payments | (108) | |||
Reserve adjustments | (6) | |||
Currency translation | (14) | |||
Reserve, ending balance | $ 128 | $ 128 |
PENSION AND OTHER POSTRETIREM_3
PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS - Net Periodic Benefit Cost Relating to Pension and Other Postemployment Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 31, 2022 | |
Net periodic benefit cost | |||||
Projected benefit obligation | $ 11 | ||||
Pension benefits | |||||
Net periodic benefit cost | |||||
Service cost | $ 19 | $ 22 | $ 59 | $ 66 | |
Interest cost | 25 | 18 | 73 | 54 | |
Expected return on plan assets | (39) | (36) | (118) | (108) | |
Amortization of net losses and prior service costs | 11 | 23 | 34 | 69 | |
Net periodic pension cost (income) | 16 | 27 | 48 | 81 | |
OPEB | |||||
Net periodic benefit cost | |||||
Interest cost | 1 | 1 | 3 | 3 | |
Amortization of net losses and prior service costs | (3) | (2) | (9) | (7) | |
Net periodic pension cost (income) | $ (2) | $ (1) | $ (6) | $ (4) |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 1.10% | (0.20%) | (1.10%) | 11.80% |
U.S. Federal statutory rate | 21% | |||
Tax benefit | $ 58 | $ 58 |
EARNINGS PER SHARE - Reconcilia
EARNINGS PER SHARE - Reconciliation of Basic Shares to Diluted Shares (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Reconciliation of Basic Shares to Diluted Shares | ||||
Basic (in shares) | 504 | 500 | 503 | 503 |
Effect of dilutive securities (in shares) | 0 | 6 | 0 | 6 |
Diluted (in shares) | 504 | 506 | 503 | 509 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |||
Anti-dilutive securities excluded from computation of EPS (in shares) | 23 | 7 | 7 |
DERIVATIVE INSTRUMENTS AND HE_3
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Additional Information (Details) € in Millions | 9 Months Ended | ||||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | May 31, 2019 EUR (€) | May 31, 2017 EUR (€) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | $ 0 | $ 0 | |||
Derivative, fair value, terminated | 0 | 0 | |||
Derivative, net investment terminated | 0 | $ 0 | |||
Deferred, net after-tax gains on derivative instruments | 22,000,000 | ||||
Undesignated derivative instruments | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | 548,000,000 | $ 851,000,000 | |||
Net investment hedge | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Accumulated pre-tax unrealized translation gain in AOCI | 265,000,000 | ||||
1.30% Senior Notes Due May 2025 | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Senior notes | € | € 600 | ||||
0.4% Senior Notes Due May 2024 | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Senior notes | € | € 750 | ||||
1.3% Senior Notes Due May 2029 | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Senior notes | € | € 750 | ||||
Foreign exchange contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, notional amount | $ 407,000,000 | 377,000,000 | |||
Maximum length of time hedge in cash flow hedge | 12 months | ||||
Interest rate contracts | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, fair value, net | $ 0 | 0 | |||
Interest rate swap | |||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||
Derivative, fair value, net | $ 0 | $ 0 |
DERIVATIVE INSTRUMENTS AND HE_4
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Gains and Losses on Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), cash flow hedge and net investment hedge, gain (loss), before reclassification, tax | $ 152 | $ 66 | $ 353 | $ 150 |
Other comprehensive income (loss), reclassification adjustment from AOCI, cash flow hedges and net investment hedges, net of tax | 5 | (6) | 7 | (27) |
Net Investment Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax | 126 | 60 | 311 | 143 |
Net Investment Hedging | Other (income) expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), net investment hedge, gain (loss), before reclassification and tax | 0 | 0 | 0 | 0 |
Interest rate contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax | 0 | 0 | 0 | 0 |
Interest rate contracts | Cash Flow Hedging | Interest expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | (1) | (1) | (4) | (4) |
Foreign exchange contracts | Other (income) expense, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in income, undesignated derivative instruments | (11) | (7) | (34) | (26) |
Foreign exchange contracts | Cash Flow Hedging | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax | 26 | 6 | 42 | 7 |
Foreign exchange contracts | Cash Flow Hedging | Cost of sales | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, before tax | $ 6 | $ (5) | $ 11 | $ (23) |
DERIVATIVE INSTRUMENTS AND HE_5
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Classification and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 35 | $ 8 |
Derivative liability, fair value | 9 | 5 |
Derivative instruments designated as hedges | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 31 | 6 |
Derivative liability, fair value | 0 | 3 |
Derivative instruments designated as hedges | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 31 | 6 |
Derivative instruments designated as hedges | Foreign exchange contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | 0 | 3 |
Undesignated derivative instruments | Foreign exchange contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | 4 | 2 |
Undesignated derivative instruments | Foreign exchange contracts | Accrued expenses and other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability, fair value | $ 9 | $ 2 |
DERIVATIVE INSTRUMENTS AND HE_6
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Positions Presented On Net Basis (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Asset | ||
Derivative asset, fair value | $ 35 | $ 8 |
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet | (7) | (2) |
Derivative asset, fair value, total | 28 | 6 |
Liability | ||
Derivative liability, fair value | 9 | 5 |
Gross amount subject to offset in master netting arrangements not offset in the condensed consolidated balance sheet | (7) | (2) |
Derivative liability, fair value, total | $ 2 | $ 3 |
DERIVATIVE INSTRUMENTS AND HE_7
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Condensed Consolidated Balance Sheet Related to Fair Value Hedges (Details) - Long-term debt - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Derivatives, Fair Value [Line Items] | ||
Carrying amount of hedged item | $ 101 | $ 101 |
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged item | $ 4 | $ 4 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Financial Instruments Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Foreign exchange contracts | $ 35 | $ 8 |
Available-for-sale debt securities | 44 | 30 |
Marketable equity securities | 25 | 10 |
Total assets | 104 | 48 |
Liabilities | ||
Foreign exchange contracts | 9 | 5 |
Contingent payments related to acquisitions | 90 | 143 |
Total liabilities | 99 | 148 |
Quoted prices in active markets for identical assets (Level 1) | ||
Assets | ||
Foreign exchange contracts | 0 | 0 |
Available-for-sale debt securities | 0 | 0 |
Marketable equity securities | 25 | 10 |
Total assets | 25 | 10 |
Liabilities | ||
Foreign exchange contracts | 0 | 0 |
Contingent payments related to acquisitions | 0 | 0 |
Total liabilities | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Assets | ||
Foreign exchange contracts | 35 | 8 |
Available-for-sale debt securities | 0 | 0 |
Marketable equity securities | 0 | 0 |
Total assets | 35 | 8 |
Liabilities | ||
Foreign exchange contracts | 9 | 5 |
Contingent payments related to acquisitions | 0 | 0 |
Total liabilities | 9 | 5 |
Significant unobservable inputs (Level 3) | ||
Assets | ||
Foreign exchange contracts | 0 | 0 |
Available-for-sale debt securities | 44 | 30 |
Marketable equity securities | 0 | 0 |
Total assets | 44 | 30 |
Liabilities | ||
Foreign exchange contracts | 0 | 0 |
Contingent payments related to acquisitions | 90 | 143 |
Total liabilities | $ 90 | $ 143 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | |
Fair Value Disclosures [Line Items] | ||||
Cash and cash equivalents | $ 1,601 | $ 1,601 | $ 2,951 | $ 3,258 |
Available-for-sale debt securities | ||||
Fair Value Disclosures [Line Items] | ||||
Transfers out of Level 3 | 8 | 8 | ||
Other Assets | ||||
Fair Value Disclosures [Line Items] | ||||
Other equity investments without readily determinable fair values | 102 | 102 | 114 | |
Significant other observable inputs (Level 2) | ||||
Fair Value Disclosures [Line Items] | ||||
Money market funds, at carrying value | $ 161 | $ 161 | $ 816 |
FAIR VALUE MEASUREMENTS - Recon
FAIR VALUE MEASUREMENTS - Reconciliation of Fair Value Measurements that Use Significant Unobservable Inputs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Contingent payments related to acquisitions | ||||||||
Contingent payments related to acquisitions | ||||||||
Fair value at beginning of period | $ 90 | $ 61 | $ 90 | $ 61 | $ 113 | $ 143 | $ 34 | $ 30 |
Additions | 0 | 28 | 0 | 52 | ||||
Change in fair value recognized in earnings | (6) | (1) | (34) | (6) | ||||
Change in fair value recognized in AOCI | 0 | 0 | ||||||
Payments | (17) | 0 | (19) | (16) | ||||
Transfers out of Level 3 | 0 | 0 | ||||||
Currency translation | 0 | 1 | ||||||
Fair value at end of period | 90 | $ 61 | 90 | $ 61 | ||||
Available-for-sale debt securities | ||||||||
Contingent payments related to acquisitions | ||||||||
Additions | 0 | |||||||
Payments | 0 | |||||||
Available-for-sale debt securities | ||||||||
Fair value at beginning of period | 44 | 30 | ||||||
Additions | 21 | |||||||
Change in fair value recognized in earnings | 0 | 0 | ||||||
Change in fair value recognized in AOCI | 3 | |||||||
Payments | 0 | |||||||
Transfers out of Level 3 | (10) | |||||||
Currency translation | 0 | |||||||
Fair value at end of period | $ 44 | $ 44 |
FAIR VALUE MEASUREMENTS - Book
FAIR VALUE MEASUREMENTS - Book Values and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Book values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Short-term debt | $ 275 | $ 301 |
Current maturities of long-term debt and finance lease obligations | 4 | 210 |
Long-term debt and finance lease obligations, less current portion | 16,153 | 17,149 |
Fair values | ||
Fair Value And Carrying Value By Balance Sheet Grouping [Line Items] | ||
Short-term debt | 275 | 301 |
Current maturities of long-term debt and finance lease obligations | 4 | 212 |
Long-term debt and finance lease obligations, less current portion | $ 14,402 | $ 17,568 |
SEGMENT INFORMATION - Summary o
SEGMENT INFORMATION - Summary of Financial Information for Our Segments (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 4 | |||
Total net sales | $ 3,773 | $ 3,226 | $ 11,226 | $ 9,270 |
Total segment operating income | (2,799) | 513 | (2,296) | 1,327 |
Corporate and other | ||||
Segment Reporting Information [Line Items] | ||||
Total segment operating income | (3,899) | (496) | (5,517) | (1,497) |
Corporate and other | Hillrom | ||||
Segment Reporting Information [Line Items] | ||||
Total segment operating income | 3,000 | 3,300 | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 3,773 | 3,226 | 11,226 | 9,270 |
Total segment operating income | 1,100 | 1,009 | 3,221 | 2,824 |
Operating Segments | Americas | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 1,703 | 1,727 | 4,975 | 4,911 |
Total segment operating income | 588 | 676 | 1,765 | 1,907 |
Operating Segments | EMEA | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 692 | 779 | 2,129 | 2,300 |
Total segment operating income | 145 | 167 | 433 | 461 |
Operating Segments | APAC | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 643 | 720 | 1,917 | 2,059 |
Total segment operating income | 152 | 166 | 459 | 456 |
Operating Segments | Hillrom | ||||
Segment Reporting Information [Line Items] | ||||
Total net sales | 735 | 0 | 2,205 | 0 |
Total segment operating income | $ 215 | $ 0 | $ 564 | $ 0 |
SEGMENT INFORMATION - Operating
SEGMENT INFORMATION - Operating Income to Income Before Income Taxes Reconciliation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total segment operating income | $ (2,799) | $ 513 | $ (2,296) | $ 1,327 |
Interest expense, net | 104 | 50 | 278 | 118 |
Other (income) expense, net | 63 | 12 | 3 | 15 |
Income (loss) before income taxes | (2,966) | 451 | (2,577) | 1,194 |
Operating Segments | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total segment operating income | 1,100 | 1,009 | 3,221 | 2,824 |
Corporate and other | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total segment operating income | $ (3,899) | $ (496) | $ (5,517) | $ (1,497) |
Uncategorized Items - bax-20220
Label | Element | Value |
Restricted Cash | us-gaap_RestrictedCash | $ 5,000,000 |