Baxter Hillrom Acquisition Presentation

Use of Non-GAAP Financial Measures In this presentation, the company is disclosing certain non-GAAP financial measures which are presented on a standalone basis for Baxter and in some cases on a pro forma basis including Hillrom. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States. The company is unable to present a quantitative reconciliation to the most directly comparable U.S. GAAP measures for the forward-looking non-GAAP financial measures used in this presentation without unreasonable effort as certain items that impact these measures, such as the potential impact of future business or asset acquisitions or dispositions, including the proposed acquisition of Hillrom, intangible asset impairments, restructuring actions, developments related to gain or loss contingencies, or unusual or infrequently occurring items that may occur during the remainder of 2021 or in future years have not yet occurred, are sometimes out of the company's control and cannot be predicted. A reconciliation to certain historical non-GAAP figures included in this document to the corresponding U.S. GAAP measures follows in the section titled Non-GAAP Reconciliations and is available at www.baxter.com. In addition, an explanation of the ways in which Baxter management uses these supplemental non-GAAP measures to evaluate its business and the substantive reasons why Baxter management believes that these non-GAAP measures provide useful information to investors is included in the company's press release filed with the SEC on Form 8-K on September 2, 2021. This information should be considered in addition to, and not as substitutes for, information prepared in accordance with U.S. GAAP. Baxter strongly encourages investors to review its consolidated financial statements and publicly filed reports (and those of Hillrom) in their entirety and cautions investors that the non-GAAP measures used by the company may differ from similar measures used by other companies (including Hillrom), even when similar terms are used to identify such measures. The non-GAAP financial measures include the following historical items: pro forma net sales, pro forma adjusted EBITDA, and pro forma free cash flow. The company defines pro forma net sales as net sales as if the results of Baxter and Hillrom had been combined since the beginning of 2020. The company defines pro forma adjusted EBITDA as income before interest, taxes, depreciation, amortization, and special items as if the results of Baxter and Hillrom had been combined since the beginning of 2020. The company defines pro forma free cash flow as operating cash flow less capital expenditures as if the results of Baxter and Hillrom had been combined since the beginning of 2020. The non-GAAP financial measures include the following forecasted items: adjusted earnings per share (EPS) accretion, pro forma net leverage, return on invested capital (ROIC), adjusted operating margin expansion, adjusted earnings growth, and free cash flow conversion. The company defines adjusted EPS accretion as the increase in its adjusted EPS (i.e., diluted EPS excluding special items, net of the related income tax effects) resulting from the proposed Hillrom acquisition. The company defines pro forma net leverage as total debt less cash and cash equivalents following completion of the proposed Hillrom acquisition divided by the trailing-twelve month (TTM) adjusted EBITDA of the combined companies as if the results of Baxter and Hillrom had been combined since the beginning of that TTM period. The company defines ROIC as free cash flow derived from Hillrom divided by the enterprise value of Hillrom at the date of acquisition. The company defines adjusted operating margin expansion as the increase in its adjusted operating income (i.e., operating income excluding special items) as a percentage of revenue. The company defines adjusted earnings growth as the percentage increase in its adjusted net income (i.e., net income excluding special items, net of the related income tax effects). The company defines free cash flow conversion as free cash flow divided by adjusted net income. Baxter H® Hillrom 3

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