BAXTER INTERNATIONAL INCBAX
BAXTER INTERNATIONAL INC Leases Disclosure
| LEASES | ||
Lessee Activity
We have entered into operating and finance leases primarily for office, manufacturing, warehouse and R&D facilities, vehicles and equipment. Our leases have remaining terms from to 37 years and some of those leases include options that provide us with the ability to extend the lease term for periods ranging from to 10 years. Such options are included in the lease term when it is reasonably certain that the option will be exercised.
Certain of our leases include provisions for variable lease payments which are based on, but not limited to, maintenance, insurance, taxes, index escalations and usage-based amounts. For all asset classes, we have elected to apply a practical expedient to account for other services within lease contracts as components of the lease. We also have elected to apply a practical expedient for short-term leases whereby we do not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months.
We classify our leases as operating or finance at the lease commencement date. Finance leases are generally those leases for which we will pay substantially all of the underlying asset’s fair value or will use the asset for all or a major part of its economic life, including circumstances in which we will ultimately own the asset. All other leases are operating leases. For finance leases, we recognize interest expense using the effective interest method and we recognize amortization expense on the right-of-use asset over the shorter of the lease term or the useful life of the asset. For operating leases, we recognize lease cost on a straight-line basis over the term of the lease.
Lease liabilities and right-of-use assets are recognized at the lease commencement date based on the present value of minimum lease payments over the lease term. We determine the present value of payments under a lease based on our incremental borrowing rate as of the lease commencement date. The incremental borrowing rate is equal to the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment.
The components of lease cost for the years ended December 31, 2025, 2024 and 2023 were:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating lease cost | $ | 88 | $ | 89 | $ | 94 | |||||||||||
| Finance lease cost | |||||||||||||||||
| Amortization of right-of-use assets | 3 | 4 | 3 | ||||||||||||||
| Interest on lease liabilities | 1 | 1 | 1 | ||||||||||||||
| Variable lease cost | 40 | 54 | 45 | ||||||||||||||
| Lease cost | $ | 132 | $ | 148 | $ | 143 | |||||||||||
The following table contains supplemental cash flow information related to leases for the years ended December 31, 2025, 2024 and 2023:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash flows from operating leases | $ | 102 | $ | 100 | $ | 115 | |||||||||||
| Operating cash flows from finance leases | 3 | 5 | 3 | ||||||||||||||
| Financing cash flows from finance leases | 1 | 2 | 1 | ||||||||||||||
| Right-of-use operating lease assets obtained in exchange for lease obligations | 36 | 64 | 66 | ||||||||||||||
| Right-of-use finance lease assets obtained in exchange for lease obligations | 4 | 1 | 15 | ||||||||||||||
Supplemental balance sheet information related to leases as of December 31, 2025 and 2024 include:
| (in millions) | 2025 | 2024 | |||||||||
| Operating leases | |||||||||||
| Operating lease right-of-use assets | $ | 276 | $ | 306 | |||||||
| $ | 81 | $ | 80 | ||||||||
| Operating lease liabilities | 223 | 243 | |||||||||
| Total operating lease liabilities | $ | 304 | $ | 323 | |||||||
| Finance leases | |||||||||||
| Property, plant and equipment, at cost | $ | 39 | $ | 33 | |||||||
| Accumulated depreciation | (18) | (15) | |||||||||
| Property, plant and equipment, net | $ | 21 | $ | 18 | |||||||
| $ | 2 | $ | 2 | ||||||||
| 21 | 19 | ||||||||||
| Total finance lease liabilities | $ | 23 | $ | 21 | |||||||
Lease term and discount rates as of December 31, 2025 and 2024 were:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Weighted-average remaining lease term (years) | |||||||||||
| Operating leases | 5 | 6 | |||||||||
| Finance leases | 7 | 8 | |||||||||
| Weighted-average discount rate | |||||||||||
| Operating leases | 3.6 | % | 3.1 | % | |||||||
| Finance leases | 4.5 | % | 4.2 | % | |||||||
Maturities of operating and finance lease liabilities as of December 31, 2025 were:
| (in millions) | Finance Leases | Operating Leases | ||||||
| 2026 | $ | 4 | $ | 93 | ||||
| 2027 | 4 | 77 | ||||||
| 2028 | 4 | 53 | ||||||
| 2029 | 4 | 34 | ||||||
| 2030 | 4 | 20 | ||||||
| Thereafter | 10 | 60 | ||||||
| Total minimum lease payments | 30 | 337 | ||||||
| Less: imputed interest | (7) | (33) | ||||||
| Present value of lease liabilities | $ | 23 | $ | 304 | ||||
Lessor Activity
We lease medical equipment, such as smart beds and infusion pumps, to customers, often in conjunction with arrangements to provide consumable medical products such as 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 years ended December 31, 2025, 2024 and 2023 were:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Sales-type lease revenue | $ | 8 | $ | 10 | $ | 7 | |||||||||||
| Operating lease revenue | 350 | 380 | 397 | ||||||||||||||
| Variable lease revenue | 27 | 28 | 21 | ||||||||||||||
| Total lease revenue | $ | 385 | $ | 418 | $ | 425 | |||||||||||
The components of our net investment in sales-type leases as of December 31, 2025 and 2024 were:
| (in millions) | 2025 | 2024 | |||||||||
| Minimum lease payments | $ | 30 | $ | 38 | |||||||
| Unguaranteed residual values | — | (1) | |||||||||
| Net investment in leases | $ | 30 | $ | 37 | |||||||
Our net investment in sales-type leases is classified as follows in the accompanying consolidated balance sheets as of December 31, 2025 and 2024:
| (in millions) | 2025 | 2024 | |||||||||
| Accounts receivable, net | $ | 11 | $ | 15 | |||||||
| Other non-current assets | 19 | 22 | |||||||||
| Total | $ | 30 | $ | 37 | |||||||
Our net investment in sales-type leases was $30 million as of December 31, 2025, of which $1 million originated in 2021 and prior, $5 million in 2022, $6 million in 2023, $10 million in 2024 and $8 million in 2025.
Maturities of sales-type and operating leases as of December 31, 2025 were:
| (in millions) | Sales-type Leases1 | Operating Leases | ||||||
| 2026 | $ | 15 | $ | 9 | ||||
| 2027 | 9 | 9 | ||||||
| 2028 | 5 | 6 | ||||||
| 2029 | 3 | 3 | ||||||
| 2030 | — | 1 | ||||||
| Thereafter | — | — | ||||||
| Total minimum lease payments | $ | 32 | $ | 28 | ||||
1 Unamortized imputed interest on minimum lease payments was $2 million as of December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 12, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 8, 2024 | |
| 2022 | Feb 9, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 11, 2021 | |
| 2019 | Mar 17, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 26, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.