Baxter International (NYSE:BAX) reported second-quarter 2026 results that exceeded its expectations, supported by broad-based sales growth, strong demand in Advanced Surgery and drug compounding, and a $75 million tariff refund. The company raised its full-year organic sales-growth outlook and increased its adjusted earnings guidance, while maintaining its focus on operational execution, cash generation and debt reduction.
Global sales totaled approximately $3 billion, up 5% on both a reported and organic basis. Adjusted earnings were $0.56 per diluted share, compared with $0.59 per share a year earlier. The results included an approximately $0.11-per-share benefit from an IEEPA tariff refund that had not been included in Baxter’s prior outlook.
Segment Growth Led by Advanced Surgery and Drug Compounding
Medical Products & Therapies sales rose 5% organically to $2.1 billion. The segment’s newly combined Infusion Therapies & Platforms division, which includes the former pharmaceuticals and infusion therapies and technologies businesses, generated $1.7 billion in sales, up 4%.
Growth in Infusion Therapies & Platforms was driven by drug compounding and IV Solutions. Drug compounding services grew at a double-digit rate, though management noted that the business carries lower margins than the broader company. IV Solutions benefited from growth following a lower demand baseline associated with clinical-practice changes in the market.
Those gains were partly offset by lower sales of infusion systems and injectables. Infusion-system performance reflected the ongoing shipment and installation hold for the Novum IQ large-volume pump, customer returns and transitions to Spectrum pumps. Baxter said demand for Spectrum IQ remained steady and that it did not see a material impact from Novum-related returns during the quarter.
Hider said Baxter has identified corrections for Novum IQ LVP field actions and is in the early stages of verification testing. The company continues to work with regulators and support existing Novum customers using available mitigations, while serving customers through its broader pump portfolio.
Advanced Surgery sales increased 12% to $331 million, reflecting demand and higher volumes for hemostats and sealants, commercial execution across regions and steady procedure volumes. Hider described the business as a strong performer, citing its customer alignment and global product portfolio.
Healthcare Systems & Technologies sales increased 4% organically to $801 million. Care & Connectivity Solutions revenue rose 5% to $502 million, driven by global Patient Support Systems demand, execution against the U.S. backlog and international growth. Front Line Care sales grew 2% to $299 million, aided by Connex 360 connected patient monitoring and the timing of large customer deals, partly offset by planned product exits.
Margins Reflect Costs and Tariff Dynamics
Medical Products & Therapies adjusted operating margin declined 350 basis points to 19.3%, while Healthcare Systems & Technologies adjusted operating margin was flat at 20.3%. At the company level, adjusted gross margin fell 210 basis points to 38.6% and adjusted operating margin declined 90 basis points to 14.2%.
Interim Chief Financial Officer Anita Zielinski said the declines reflected higher manufacturing costs, including lower absorption, Section 122 tariff effects, lower pricing contribution and an unfavorable comparison with the prior-year period. The prior-year quarter had benefited from a change in estimate that reclassified expenses between selling, general and administrative costs and cost of sales.
The impact was partly offset by the tariff refund and higher sales volumes. Zielinski said higher-cost inventory produced at the end of 2025 has now moved through Baxter’s profit and loss statement, which the company expects to support sequential improvement in the second half.
Second-quarter free cash flow totaled $181 million, bringing year-to-date free cash flow to $257 million. Baxter said improved operating performance and working-capital actions supported cash generation. The company continues to target net leverage of about three times by year-end, with debt reduction its top near-term capital-allocation priority.
Updated 2026 Outlook
Baxter raised its full-year organic sales-growth forecast to 2% to 3%, compared with its previous outlook, reflecting stronger first-half performance and expectations for continued growth in the second half. The company now expects reported sales growth of 3% to 4%, including an expected approximately 100-basis-point benefit from foreign exchange and an approximately $25 million headwind from Vantive master services agreement revenue.
- Medical Products & Therapies organic sales are expected to grow low single digits for the full year.
- Healthcare Systems & Technologies organic sales are also expected to grow low single digits.
- Adjusted operating margin is still expected to be between 13% and 14%.
- Net non-operating expenses are projected at $260 million to $280 million.
- The adjusted tax rate is expected to range from 18.5% to 19.5%.
- Full-year adjusted earnings guidance was raised to $1.95 to $2.15 per diluted share from $1.85 to $2.05 per share, primarily reflecting the tariff refund.
Baxter expects approximately $40 million of tariff impact, net of mitigating actions, in the second half. It also expects improved second-half performance from higher seasonal volumes, benefits from cost actions and the roll-through of higher-cost inventory.
Operational Initiatives and Product Launches
Hider said Baxter’s Growth and Performance System, or Baxter GPS, is becoming more embedded across the organization. The company completed more than 400 continuous-improvement events during the first half, has nearly 200 in progress and has another 400 planned.
Baxter also highlighted several product initiatives. It launched PeerView, a digital benchmarking application designed to help hospitals compare infusion data and improve infusion practices. In Front Line Care, the company began a limited market release of Vest APX Acute Care, an airway-clearance device, with a full release planned near the end of the third quarter. Baxter also reported growing adoption of Connex 360 and early commercial momentum for its Dynamo smart hospital stretcher, which has now launched in Canada.
Management said it has not observed a change in U.S. hospital capital-spending patterns to date. Hider said the company’s order book and sales funnel remain solid, though Baxter continues to monitor macroeconomic uncertainty and customer buying behavior.
About Baxter International (NYSE:BAX)
Baxter International Inc is a global healthcare company that develops, manufactures and markets a broad portfolio of medical products, pharmaceutical therapies and biotechnology-based solutions. The company’s primary business activities are organized around renal care, medication delivery, acute therapies, pharmacy automation, surgical care and biotechnology. Baxter’s offerings are designed to support patient care in hospitals, dialysis centers, nursing homes and other healthcare facilities worldwide.
In the renal care segment, Baxter provides hemodialysis and peritoneal dialysis systems, water treatment equipment and related disposables, including dialyzers, bloodlines and catheters.
