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The transfusion division of health care giant Abbott screens about half of the U.S. blood supply, so the nationwide decline in blood donations since the COVID pandemic has been not only a public health problem but, for Abbott, a business problem. The company tackled the dilemma by appealing to college students’ competitive streak: Last year, it launched the “We Give Blood” campaign among students at schools in the Big Ten conference, coinciding with the college football season. 

The 2024 initiative resulted in nearly 20,000 donations, enough to save up to 60,000 lives. First-time donors represented 69% of We Give Blood participants. In and around the University of Nebraska—the school that won the competition—local blood centers saw a 27% increase in young donors (ages 16 to 24) versus the previous year. Season two kicked off this September, and is attracting donors at an even faster rate: It neared 20,000 donations in just the first four weeks of the drive.

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CTW-2023-Abbott-Graduation-F2S1

Student debt is a massive burden in the U.S. There are more than 43 million borrowers carrying a combined $1.8 trillion in obligations. Debtors often have to choose between paying off their student loans or saving for retirement. That’s why Abbott developed Freedom 2 Save. F2S is a benefit program in which enrolled employees who put 2% of their pay toward their student loans get a corporate match of 5% into their 401(k)s—keeping them from having to sacrifice their future to pay off their past. The health care company’s innovative offering required special permission from the IRS before it could launch in 2018. To date, Abbott has contributed more than $5.5 million to over 2,500 of its employees, including $1.7 million in 2022 alone. Beginning in 2024, all U.S. employers will be able to offer a similar benefit through a provision of the SECURE 2.0 Act—inspired by Abbott’s offering—which will enable employers to match employees’ student loan payments with 401(k) contributions.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500-2023-099-Abbott Labortories

Riding the tail end of a sales boom in COVID-19 tests, the medical device and health care products firm dropped 13 spots on the Fortune 500 in 2022, with revenue increasing only 1.3% and profits down 2%. 
<ul> 
 	<li>COVID-19 test revenue accounted for one-fifth of Abbott’s bottom line in 2022, jumping to $8.4 billion from $7.7 billion in 2021. At the end of the first quarter of 2023, the firm projected test sales to drop to $1.5 billion for the year.</li> 
 	<li>Abbott fed some of its COVID-19 test proceeds into research and development, investing an additional $2 billion in 2022.</li> 
 	<li>The Department of Justice is investigating Abbott’s infant formula plant in Michigan, which shut down from February to June 2022 owing to contamination, setting off a nationwide shortage.</li> 
</ul>

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Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

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GPTW Health Care Large 2022-Abbott Laboratories_1000884-3 copy

Employees say: 
 
“I have never worked at a company that has put so much effort into making sure that their employees are taken care of. Abbott seems to go to great lengths to help employees, their family and the community.”

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F500-2022-086-Abbott Laboratories

COVID-19 testing continued to drive revenue growth for Abbott Labs in 2021: As of January 2022, the company had distributed about 1.4 billion tests, and those generated $7.7 billion in sales in 2021. Medical devices and nutrition products like Similac and Ensure together account for about two-thirds of Abbott’s revenue. The nutrition division endured a setback in early 2022, however, when Abbott issued a voluntary recall of powdered infant formula manufactured in one of its facilities in Michigan after the plant was linked to a bacterial-infection outbreak; the shutdown contributed to a nationwide formula shortage.

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WMAC 2021-42-Abbott Laboratories

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Abbott Laboratories leveled up on this year’s Fortune 500 list, leaping from last year’s rank of 104 to No. 89. Why? COVID testing. Abbott was one of the first to jump into the testing market, and that alacrity has paid off; the company’s diagnostics unit, which also houses its COVID test arm, raked in more than $4 billion in sales during the first quarter of 2021 alone. Abbott, though, isn’t putting all its eggs in one basket. As life starts returning to normal, the company believes its diabetes care and glucose monitoring products will continue to fuel growth. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri, Arial&quot;,&quot;16&quot;:11}" data-sheets-textstyleruns="{&quot;1&quot;:0}{&quot;1&quot;:46,&quot;2&quot;:{&quot;6&quot;:1}}{&quot;1&quot;:53}">Abbott Laboratories leveled up on this year’s Global 500 list, leaping from last year’s rank of 393 to No. 350. Why? COVID testing. Abbott was one of the first to jump into the testing market, and that alacrity has paid off; the company’s diagnostics unit, which also houses its COVID test arm, raked in more than $4 billion in sales during the first quarter of 2021 alone. Abbott, though, isn’t putting all its eggs in one basket. As life starts returning to normal, the company believes its diabetes care and glucose monitoring products will continue to fuel growth.

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Best Workplaces Healthcare Large 2021-Abbott Laboratories

Employees say: 
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Read Great Place to Work review .

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F500-2021-89-Abbott Laboratories

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Abbott Laboratories leveled up on this year’s Fortune 500 list, leaping from last year’s rank of 104 to No. 89. Why? COVID testing. Abbott was one of the first to jump into the testing market, and that alacrity has paid off; the company’s diagnostics unit, which also houses its COVID test arm, raked in more than $4 billion in sales during the first quarter of 2021 alone. Abbott, though, isn’t putting all its eggs in one basket. As life starts returning to normal, the company believes its diabetes care and glucose monitoring products will continue to fuel growth. &quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri, Arial&quot;,&quot;16&quot;:11}" data-sheets-textstyleruns="{&quot;1&quot;:0}{&quot;1&quot;:46,&quot;2&quot;:{&quot;6&quot;:1}}{&quot;1&quot;:53}">Abbott Laboratories leveled up on this year’s Fortune 500 list, leaping from last year’s rank of 104 to No. 89. Why? COVID testing. Abbott was one of the first to jump into the testing market, and that alacrity has paid off; the company’s diagnostics unit, which also houses its COVID test arm, raked in more than $4 billion in sales during the first quarter of 2021 alone. Abbott, though, isn’t putting all its eggs in one basket. As life starts returning to normal, the company believes its diabetes care and glucose monitoring products will continue to fuel growth.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-393-Abbott-Laboratories

Health care company Abbott Labs manufactures medical devices, diagnostic tools, and nutritional products like Ensure. While the pandemic has depressed some aspects of Abbott's business, demand for COVID-19 testing has buoyed its diagnostic arm.

The best workplaces in health care and biopharma make their employees feel valued while the health care industry continues to undergo rapid technological changes.

Best Workplaces in Health Care and Biopharma-2020-Abbott Laboratories

Employees say: 
“People aren't just here to earn their paychecks, but to make high quality products for the people that depend on them. The people also really care about each other here and go out of their way to ensure that everyone is comfortable.” 
Read Great Place to Work review .

This year's Fortune 500 marks the 66th running of the list.

F500-2020-104-Abbott-Laboratories

Health care company Abbott Labs manufactures medical devices, diagnostic tools, and nutritional products like Ensure.

As we face unprecedented collective challenges, cooperation has become a business superpower.

24.CTW20.Abbott

Health care access is a challenge in Rwanda, which makes one diagnostic innovation by Abbott Labs particularly valuable. Abbott’s prenatal panel tests simultaneously for syphilis, malaria, HIV, and hepatitis B, using only one finger-stick of blood, with results in the same visit. For expectant mothers who may have time or resources for only one trip to the clinic, that means better care; the test has also enabled a tripling of malaria case detections. 
 
At press time, health care providers were just beginning to deploy another potentially crucial Abbott diagnostic product: An “antigen” test for COVID-19 that yields results in 15 minutes and costs $5.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Abbott Laboratories is a global health care company. Founded in 1888, the company operates in four main segments: established pharmaceutical products, diagnostic products, nutritional products—including infant formula—and medical devices. As of 2024, Abbott’s medical devices segment was its largest and fastest-growing, accounting for about 45% of revenue. That segment includes devices for monitoring cardiovascular health, glucose monitoring systems for diabetes care, and neuromodulation devices for chronic pain and movement disorders.

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Abbott Laboratories (ABT): Company Profile, Stock Price, News, Rankings

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Abbott Laboratories

abbott laboratories

Good morning, and thank you for standing by. Welcome to Abbott's Third Quarter 2026 Earnings Conference Call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star one one keys on your touchtone phone. This call is being recorded by Abbott. With the exception of any participant's questions asked during the question and answer session, the entire call, including the question and answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's express written permission. I would now like to introduce Mr. Mike Comilla, Vice President, Investor Relations.    

Good morning, and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer, and Phil Boudreau, Executive Vice President, Finance, and Chief Financial Officer. Robert and Phil will provide opening remarks. Following their comments, we'll take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10-K for the year ended December 31st, 2025.

Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com. Note that Abbott has not provided the related GAAP financial measures on a forward-looking basis for the non-GAAP financial measures for which it is providing guidance because the company is unable to predict with reasonable certainty, and without unreasonable effort, the timing and impact of certain items which could significantly impact Abbott's results in accordance with GAAP. Unless otherwise noted, our commentary on sales growth refers to comparable sales growth.

Our definition of comparable sales growth can be found on page two of our press release issued earlier today, and a reconciliation table containing the data needed to calculate comparable sales growth can be found on pages 16 and 17. With that, I will now turn the call over to Robert.

Thanks, Mike. Today marks an important milestone in Abbott's history. Along with reporting our third quarter results, we announced our intention to separate our nutrition business into an independent, publicly traded company. This decision follows a comprehensive strategic review and reflects our strong belief that both Abbott and the nutrition business can create greater value and achieve their maximum potential as independent organizations. Abbott entered the nutrition business more than 60 years ago. Since that time, we built a strong foundation anchored by a talented global organization, iconic brands, scale, and established market leadership positions across the pediatric and adult nutrition categories. The nutrition market has evolved over time, with the pace of change accelerating significantly in recent years. What was once predominantly viewed as a healthcare market, almost exclusively shaped by healthcare professionals, has increasingly become a market shaped by changing consumer preferences, wellness trends, and retail execution. 

While this market evolution is not inherently positive or negative, it has fundamentally changed the environment in which we operate. To best position our nutrition business for maximum long-term success, we must evolve and adapt accordingly. At the same time, Abbott has strategically repositioned its portfolio over the past decade into attractive, high growth markets that require sustained investment to drive innovation and support long-term growth. We believe both businesses will be better positioned for the future as independent organizations, each with a distinct identity, reflecting their different customer bases, growth profiles, investment requirements, and innovation cycles. This separation will enable both companies to sharpen strategic and operational focus, direct resources more effectively, and enhance commercial and R&D effectiveness.

As an independent company, nutrition will be uniquely positioned to capitalize on the growing demand for healthy nutrition as consumers increasingly recognize the importance of metabolic health and the role healthy nutrition plays in disease prevention and overall wellness. The new nutrition company will be created from a position of strength. The team has done an exceptional job building a balanced growth model supported by sustainable mix of volume and price. The portfolio includes several iconic brands, including Similac, PediaSure, Ensure, Glucerna, and Pedialyte, which have market-leading positions across the pediatric and adult nutrition categories. With approximately $8.5 billion in annual sales, 16,000 employees, and 14 manufacturing sites, this will be the largest globally scaled pure-play company in the healthy nutrition market. Given its scale and financial profile, we would expect this new company to qualify for inclusion in the S&P 500.  

I'm pleased to share that Daniel Salvadori, Executive Vice President and Group President of Established Pharmaceuticals and Nutrition Products, will become Chief Executive Officer of the new nutrition company. Daniel joined Abbott in 2014 as Senior Vice President in our Established Pharmaceuticals business for Latin America and also served as Executive Vice President of Nutrition Products for four years before being appointed to his current position in 2021. Throughout his career at Abbott, Daniel has demonstrated outstanding strategic insight and operational excellence. His broad international experience and proven track record of delivering results as a business operator make him exceptionally well-suited for this role, and I'm confident he will be a tremendous success. Daniel will be joined by an experienced leadership team with deep industry experience. This is a battle-tested team that has demonstrated exceptional resilience and dedication while navigating a dynamic and evolving operating environment.

Following the separation, Abbott will remain one of the largest, most diversified and fastest-growing healthcare companies in the world. The Abbott portfolio will consist of even stronger mix of higher growth, higher margin businesses powered by technology and innovation. As a result, we expect Abbott's sales growth to accelerate and margin profiles to expand. While the Abbott portfolio will evolve, maintaining balance across products, payers, and geographies will remain a key strength and source of resilience for the company. We built this portfolio to hold market-leading positions in three of the most attractive areas of healthcare: MedTech, Diagnostics, and Established Pharmaceuticals. The portfolio was also intentionally built to align with durable healthcare trends, including an aging population, increasing prevalence of chronic disease, and a growing demand for earlier diagnosis and more personalized treatment.

With market-leading positions, an industry-leading pipeline, and a proven ability to consistently generate strong earnings growth and cash flow, Abbott is exceptionally well-positioned to deliver sustainable growth and create long-term shareholder value in the years ahead. I could not be more excited about this future. I have tremendous confidence in Abbott's future as an innovation-driven healthcare company, and I am also confident in the opportunities that lie ahead for the new nutrition company. Most importantly, this creates two stronger organizations that will both continue to fulfill our mission of helping people live better lives. We look forward to sharing updates on our progress as we move through the separation process. I will now review the third quarter results before I turn the call over to Phil.

Sales grew 7% in the third quarter, and earnings per share grew 9%, representing an acceleration in growth on both top and bottom lines compared to our results in the first half of the year. Turning to diagnostics, where sales grew 6.5%, driven by performance in our core laboratory and cancer diagnostic businesses. Core lab sales grew 5.5%, driven by strong performance in the U.S., Europe, Japan, and Latin America. On our earnings call in July, I highlighted that test volume data, sourced directly from thousands of instruments located across the U.S. and around the world, showed a pattern of strong and stable demand. We view this as a positive indicator of the underlying demand for healthcare more broadly. During the third quarter, our testing data continued to support that view, with testing demand remaining healthy and at durable levels. 

In cancer diagnostics, sales growth of 14% was driven by Cologuard and contributions to growth from our precision oncology and international businesses. In September, we launched our first blood-based colorectal cancer screening test. As the only company to offer both stool-based and blood-based screening options, we are expanding the options available to healthcare providers and patients to help achieve the goal of getting more people screened. Turning to nutrition, sales grew 5%, reflecting broad-based growth across all four categories: U.S. pediatric, international pediatric, U.S. adult, and international adult. As I mentioned earlier, the team has done an exceptional job executing a more balanced growth strategy, achieving a more sustainable mix of volume and price-driven growth. In pediatric nutrition, sales grew 9%, led by growth of 11% in the U.S.

As I noted last quarter, the strong performance in the U.S. includes the benefit from WIC contract wins secured earlier this year, which helped Abbott regain its market leadership position in both the WIC and non-WIC segments. In adult nutrition, sales increased 2%, driven by growth of 3.5% in the U.S. as retail consumption data continues to trend in a positive direction. We also continue to deliver strong growth on a sequential basis, with worldwide nutrition sales increasing more than $100 million compared to the second quarter. Finally, we continue to make good progress advancing our innovation pipeline. During the quarter, we launched a new version of the Similac infant formula made with whole milk. This new product is the first and only commercially sterile, ready-to-feed liquid infant formula made with whole milk available in the United States. Turning to EPD, where sales increased 8.5% in the quarter.

Our broad portfolio of prescription and over-the-counter medicines tailored to address local healthcare needs continues to drive strong growth across emerging markets. Growth in the quarter was broad-based across geographies and therapeutic areas, and this included double-digit growth in several countries across Asia, Latin America, and the Middle East, highlighting the strong and durable demand that has long been a hallmark of this business. I will wrap up with medical devices, where sales grew 8%. Growth was well-balanced across the portfolio, led by double-digit growth in electrophysiology and rhythm management. In electrophysiology, our third quarter results reflect the early beginning of our growth acceleration phase. Growth in the quarter was mid-teens or high teens when excluding LAA. In the U.S., growth was in the high teens and exceeded 20%, excluding LAA.

This performance was driven by increasing adoption of our new Volt PFA catheter, with momentum accelerating in September following the transition to a full U.S. market release in mid-August. International growth also accelerated as we continue to capture market share in Europe, driven by increasing uptake of our new PFA catheters and growth in other categories across our broad portfolio. In September, we received FDA approval earlier than expected for our TactiFlex Duo catheter. This catheter enables physicians to seamlessly switch between using RF and PFA energy during a procedure. Given physicians' familiarity with the TactiFlex platform, we expect to execute a broad U.S. launch starting in the fourth quarter. In the third quarter, we also received CE Mark for our new Amulet 360 left atrial appendage device, designed to help reduce the risk of stroke in patients with AFib.  

We look forward to bringing this new technology to the U.S. In rhythm management, sales grew 10%, driven by increased adoption of AVEIR across both single and dual-chamber segments of the pacemaker market. This expanding use of AVEIR is occurring in both the U.S. and international markets. In diabetes care, continuous glucose monitoring sales grew 8% in the quarter. In August, we received FDA approval for Libre Duo, the world's first dual glucose ketone biowearable sensor. This marks the first time that people with diabetes will be able to monitor ketones without the need for traditional blood or urine tests, and we expect to launch this new sensor in the U.S. in December. In summary, we delivered an acceleration in growth on both top and bottom lines.

Innovation continues to be a key differentiator for Abbott, highlighted by multiple new product approvals and launches that further strengthen our ability to deliver sustainable growth in the years ahead. We took an important strategic step towards shaping our future through the planned creation of a new market-leading nutrition company. I will now turn over the call to Phil.

Thanks, Robert. Let me begin my remarks with an overview of some of the key aspects of our planning process for the separation. The new nutrition company will become a publicly traded company through a planned tax-free distribution to Abbott shareholders. Upon completion of the separation, Abbott shareholders will own shares of both Abbott and the new nutrition company, enabling our shareholders to participate in the value creation opportunities of both businesses. The final share distribution ratio will be communicated prior to the separation, which we anticipate completing by the end of next year, subject to the required approvals. We expect to incur separation-related costs as we progress through the separation process. These costs will be treated as specified items and excluded from adjusted earnings. As a result, we do not expect the separation to have an impact on we plan to provide in January. 

As we prepare for the separation, we intend to establish capital structures that ensure both companies have a strong financial foundation. This includes ensuring adequate capital to support long-term growth objectives and capital allocation priorities while maintaining strong investment-grade credit ratings for both companies. As part of that process, we are planning for the new company to raise debt, with a portion of the proceeds to be distributed to Abbott. The amount of debt to be raised and the amount to be distributed to Abbott will be determined at a later date. Finally, we expect that both Abbott and the new nutrition company will pay a dividend that, when combined, will equal Abbott's dividend at the time of the separation. Following the separation, we expect Abbott's financial profile to reflect an acceleration in the sales growth and increased profitability.

Excluding the current profile of the nutrition business from the current profile of the Abbott portfolio, we would expect sales growth to accelerate by 50 to 100 basis points, gross margin as a percent of sales to increase by more than 200 basis points, and an operating margin as a percent of sales to increase by approximately 100 basis points. Now turning to our third quarter results. Sales increased 7% on a comparable basis, and adjusted EPS of $1.42 was in line with our guidance and the consensus estimate. Foreign exchange had an unfavorable year-over-year impact of 0.4% on third quarter sales, which was a slight improvement compared to our expectations at the time of our earnings call in July. Regarding other aspects of the P&L, the adjusted gross margin profile was 57.2% of sales, representing an increase of 140 basis points compared to the prior year.

The improvement in gross margin was broad-based, reflecting favorable business mix within the legacy Abbott portfolio and from the addition of Exact Sciences, as well as the continued operational improvements and disciplined execution of our margin expansion initiatives. Adjusted R&D was 6.9% of sales, and adjusted SG&A was 26.9% of sales. Our operating margin of 23.4% expanded by 40 basis points compared to the prior year. 

Based on current rates, we expect exchange to have a negative impact of approximately 1% on fourth quarter sales. For the fourth quarter, we forecast adjusted earnings per share of $1.62-$1.67. With that, we will now open the call for questions. 

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star one one again. For optimal sound quality, we kindly ask that you please use your handset instead of your speakerphone when asking your question. Again, that is star one one to ask a question. Please stand by while we compile our Q&A roster. Our first question will come from Robert Marcus from JPMorgan. Your line is open. 

Great. Good morning, and thanks for taking the questions. I am sure others will ask on the business and the guide, but Robert, given the news this morning on nutrition, I wanted to start with that to make sure we address it. Maybe you could run through the strategic rationale, why now, why spin versus sell, and any other important points you want to highlight for us. Thanks a lot.

Sure, Robbie. I actually think that's the right question to start off with, to be quite honest. It's a pretty big announcement for us, and we've gone through a lot of work to be able to make this announcement today. I've seen a lot of notes be written about the portfolio, and all of those notes are from some of the parts, and growth rates, and impact to growth rates, and margin profiles, and I think Phil mentioned some of those. Those are all, I would say, good outputs of a decision like this. I think it really starts with a very simple, as I laid it out, which is there's a huge opportunity that I think is building in this market, in this segment. We're seeing a shift towards a much more healthy nutrition behavior from consumers, not just in this country, but around the world.

You're seeing a lot of traditional food companies try to reposition their portfolios, moving away from ultra-processed to try and look at their portfolios, and ultimately try and build portfolios that try to mimic actually the portfolio that we actually have today. I just think that strategically, over the next decade, there's going to be a lot of segments in this nutrition business that we've built that are going to be very differentiated and high growth. If you look at nutrition's portfolio, its position today, the capabilities that it has, it is destined to be a market leader and a market shaper of that entire segment that's going to have this accelerating growth here. They are going to need to adapt, as I said in my comment.

They are going to need to evolve, and ultimately, they are going to need to invest in sales and marketing, even maybe look at tuck-in M&A from their perspective to accelerate their growth rates and all of that. We just came to the conclusion that this was too exciting of an opportunity, and we just believe that all the things that they would need to do, they'd probably be able to do it faster and more efficiently and effectively as an independent company. It really just comes down to that. Yeah, there's, I would say, the ancillary effects of those decisions, Robbie. I think you've done a good analysis on that in terms of what that does to our growth rates and all of that. I think it really comes down to really the driver of the decision is this is going to be an exciting space.

As a result, we think that the nutrition business is going to be able to capitalize better on that by being an independent company. From a financial asset perspective, as we look at the spin, I think this is going to be a very unique asset. If you benchmark it versus its category peers, and not necessarily versus the MedTech peers that they're currently part of right now, it'll be a very differentiated asset, whether you think about growth mix, the scientific capabilities it has, its growth prospects. It's going to be, as I said, the only truly global scaled pure play in this kind of healthy nutrition. I think this is going to be a very distinct asset. To your question on why now. Listen, we've got a history of shaping the company.

I think that's one of the hallmarks of Abbott, and that's I think why we're still relevant today after 138 years, is that we will look at shaping the portfolio to align to where we see the market trending and where we see clinical needs and problems to be solved occurring. But as you do that, you also need to be thinking about sequencing. I think sequencing here is a key element as you think about shaping the portfolio. There are very different elements of shaping. But for me, from an operational standpoint, I just think you need to be mindful of organizational bandwidth and ability for the organization here to absorb the moves. So, we have an order of events in mind of how we're thinking about things. 

For example, if you go back a couple of years, we identified precision diagnostics as the next area that we wanted to be a part of. So we announced our acquisition of Exact Sciences last year. The integration is going great. Actually, I think we've done a lot of heavy lifting in these first six months, have got a lot done. I'm sure we'll talk about that too. So I just think that now is the right time to start that process of creating the new company, it's coming from a position of strength, as I said in my comment. I think I read a story that just came out, a headline that just came out on Barron's, who got it totally wrong. I'm just going to say it. It's coming out of a position of strength. And we've got a very sustainable growth model.

If you look at the volume growth that Nutrition had this quarter and what we're projecting to have in the next few quarters, it is significantly higher than what its peer set is, given the portfolio that we've built and the segments that we're in. So the business has returned to growth. The pipeline is very healthy. We're bringing innovations to the market. There's going to be a lot of interesting innovation over the next kind of 12 months here. Got strong brands, experienced and very capable team. As I said in my comment, I specifically chose the term battle tested because that's kind of what it felt like over the last four or five years. And if I had to pick a team to go into battle with in this nutrition space, I'd pick that team.

I think they've navigated very well everything that they've done and all the environment that they've operated in. So I think this is just a unique opportunity for us and for the Nutrition business. And I think you had a question on spin versus sell. Yeah, we just thought that this was, after we went through the analysis, after you make a decision that it's probably going to operate better as an independent company, what's the right mechanism there to be able to position it to be a leading company and ultimately to drive shareholder value? And we just concluded that the spinoff here was absolutely the right approach. A sale of a business like this, as I said, we've been in this business since the 1960s. So you think about the sale, the sale's going to come with an obvious tax implication there.

And then a timeline that is not necessarily entirely within our control here. I think these two factors might be a little bit prohibitive here for anybody that's got any interest. We have no interest in selling the business, have no intention to selling, not even looking at selling it, and just think that spinoff is the better value creation for shareholders here. Obviously, we've done a couple spinoffs in our history. Those have gone very well. Obviously different circumstances, different times, different management teams.

But I think one of the things that is clear to us in these processes is, I think one of the big indications here of a successful spin, I think a lot is attributed, I think, to a very highly group of Abbott people that become founders, so to say, of the new company, and they instill a lot of the Abbott kind of culture and the Abbott way of doing things into that business, and I think that helps set a strong foundation here. Like I said, I think this is a unique opportunity, growing demand for healthy nutrition. This will be a very differentiated asset here, and that's why I thought the spin was the better move here. And obviously, we're going to be working over the next kind of 12 months here to be able to get ready for that.

And as we do with these, I think, Robbie, is we obviously are going to prepare to set up the Nutrition company for success. But it's also an opportunity for us to re-look also at existing Abbott and looking at our cost profiles and things like that. It's going to be a great opportunity for us to re-look at everything from that perspective. I'm excited about this. I think this was a good process. I think we came to the right long-term strategic decision here. And now it's all about execution.

Thank you. Our next question will come from Larry Biegelsen from Wells Fargo. Your line is open. 

Good morning. Thanks for taking the question. Robert, congrats on the Nutrition spin. Just confirm, please, that the NEC liability will remain with Abbott. That seems logical from what we've seen from other spins. Secondly, can you please talk about the drivers of the revenue guidance reduction this year? It looks like it implies about 8% growth in Q4, and what are the implications for 2027? Thank you.

Sure. I figured this question would come up, Larry. I thought it would come up a little bit down in the list here. I think, like you said, as it pertains to the announcement that we just made, how to deal with litigation matters is a common topic when it comes to business separations. We're not the first company that's had to deal with this, like you said. Actually pretty clear that we don't need to fully resolve the litigation matters. It's not a prerequisite for completing the separation. I'd say both Abbott and the new company are going to be well capitalized. Well capitalized to pursue their respective growth opportunities, well capitalized to execute the respective capital allocation priorities that they might have, and also well capitalized to continue to defend the legal positions here. 

I'll provide more details of that as we progress in terms of exactly where the liability will sit. But for me, both companies are going to be super well capitalized to be able to deal with that. At the same time, I think we continue to focus on achieving what we want to be a logical and sensible kind of resolution. You saw we took meaningful step back in August when we settled 2,000 claimants. But that settlement in no way reflects any change to the position that I've made here about these products, which is continue to stand behind their efficacy and safety. They remain essential component to neonatal care. They are a standard of care.

I think if these products weren't available, I think you would see a little bit of a public health crisis there, and I think that view is supported by regulators and medical societies, including the FDA, NIH, CDC, and the American Academy of Pediatrics. So I think the litigation environment now is shifting, I would say, a little bit to our favor. We prevailed a lot in federal MDL cases, and there's going to be important decisions in both federal and state courts that have helped increase our position. So we'll provide updates as we go through the process in terms of a little bit more specificity and details. But all I can say is not a prerequisite to resolve it before the separation, and both companies will be well-capitalized to be able to deal with this. And then, sorry, what was your second question, Larry?

Yeah, sorry. The revenue guidance reduction, I think to 6% this year implies about 8% for Q4. What was the driver or drivers of the revenue reduction and implications for next year? Thank you.

Sure. Yeah, listen, our Q3 growth was in line with the expectation of 7%. We had the normal puts and takes, Larry, that you have when it comes to managing a large portfolio like ours. We had two businesses that beat expectations, one business that met expectations, and then one business that missed expectations. So the reduction in Q4 for the full year, around 6%, like you said, implies just north of 8%, which is at least accelerating versus where we were in Q3. I mean, it's really driven by two businesses here. And I would characterize these as they're not kind of permanent changes to the growth rate, it's just adjusting based on what we're seeing right now, which is EP and diabetes. So let me unpack that a little bit for you. In EP, we're facing some short-term headwind from the dynamics related to the LAA market.

It's become an increasingly headwind to our EP growth, not only due to the market challenges that I think a competitor has discussed pretty ample. But I'd say for us, so we saw that maybe with a quarter or two delayed versus where they were seeing it. And maybe that's just because of our size and market share position. But what was interesting is as soon as we got CE Mark for the new LAA device, there was almost like an immediate slowdown in orders here in the U.S. as I think accounts are waiting for the new product. So that's probably a little bit different for us. So when I got that, I was like, "Really?" And they were able to show me clearly trends that we were seeing, even with the slowdown and the impact of that CE Mark. 

I expect that dynamic to be there in Q4, and I think that's going to be the last quarter where we're going to see this dynamic of accelerating ablation business being offset a little bit by this headwind here. I think as we bring Amulet 360 to the market, I think we'll start to reignite that growth and capture share. At least that's my goal. But listen, despite the headwind, as I said in the prepared comments, I think the quarter we exited with a lot of great momentum. We continue to capture share in Europe. Europe growth was up 25%, and you have both platforms there, Volt and TactiFlex Duo. We're going to launch Volt in Japan sometime in Q4. That's going to turn Japan from a headwind to a tailwind for us.

Japan followed very much a U.S.-type model where there was very rapid adoption of PFA. So we're excited about coming to the market in the fourth quarter in Japan. And I think Volt transitioned from limited market release to full market release in the U.S. in mid-August. So Q4 you'll have this full quarter of the impact over there. And the product's doing very well. And I think people might not have understood the dynamics of what a limited market release is and then how you transition to full market release, and I explained why we do that for all of our products. So TactiFlex Duo got approval in September. That came a little bit earlier than I expected. And as I said in the comments, this is one where the TactiFlex chassis, I'll say, is widely used already.

So we'll probably do a very short limited market release here, very short, and then go to full launch already in Q4. So I think that's going to provide a lot of momentum here. So we've got a lot of catalysts lined up for our EP business. So I think the impact of that is about 5 points of growth versus where we were previously around 25%. I think we'll be around 20% in Q4. But I still believe even with that number, we're going to be taking market share. So that's one of the drivers. The other driver is diabetes. I think in the July call, Larry, I talked about that the CGM market had not seen a significant new reimbursement expansion for quite some time, and that led us to revise our diabetes growth outlook to high single.

If I look into Q4 right now, and probably for the next few quarters, I expect that growth rate to be in that low to mid-single range. And that change really reflects, I think, two things. One of them is a little bit of a harder challenge in penetrating the type two population in absence of the reimbursement expansion. So that's probably one key driver. And like I said, that's going to be when we see the reimbursement expansion occur at CMS, then like I said, I think we'll see a very strong reimbursement growth. So that's one element there, Larry. And I think the other element that we're seeing is a little bit more pricing pressure in the international markets. And as you might know, we have significant market share in the international markets. 

If you look at all the major countries, we'll range between 50%-70% market share. We've always expected there to be some pricing pressure, especially with the growth of the category and the excitement. Internationally, I think you see a lot more competition, and we've been very good. I think the team's done an excellent job through marketing, through clinical, through all the superiority of the product over the last couple of years to be able to defend that. I actually expected to be a little bit more price pressure internationally, a little bit earlier. I think the team did a really good job there. I think our pricing actions here that we're going to have to take internationally are going to kind of mute a little bit of the volume growth that we're seeing.

I think it would be a strategic mistake for us to lose market share based on price in these international markets. We're not having to match the pricing, Larry, but I think we're having to adjust a little bit here as we go through this. I think that's what I'm forecasting here over the next few quarters, is we'll make some pricing adjustments. As we do those, we're going to secure longer term contracts, and then also have language there regarding expansions of patient populations also. I think you have this dynamic here for a couple of quarters in our diabetes business so that we can make sure that we can defend our market share position.

Then I think what you'll see then is kind of similar to kind of decisions we've made in other parts of the portfolio, where you have a little bit of an impact for a couple of quarters, and then you kind of reignite. I don't think this is at all any issue with the market. I've been pretty adamant about the ability still for there to be lots of market penetration. But we're not going to have our heads in the sand here and just think that you've got this great market and not expect there to be some price competition.

The good thing for us, though, I would say is because of the scale that we built and because we've been planning for this and being ready for this, we're going to be able to offset the margin impact of that through our COGS programs and the things that we've been doing in our manufacturing setup. I think that's really the driver. But I would say if you look at, we got plenty of growth opportunities also, Larry. So when I kind of set that target of kind of low to mid, if I look at what we've got ahead of us, Libre Duo is going to launch. We really haven't launched that product yet, and I think that's going to be a nice growth driver for us next year.

We're going to have a benefit here in the U.S. from a pretty significant payer formulary coverage that flipped in our favor, and that's going to go into effect January 1st. There's a lot of growth opportunities that we've got in our diabetes business. Would I be surprised that we would do much better than that next year? It would not surprise me at all that we would do better. But at this point, I'd say we got to make sure we get the pricing aspect right. Then as we go through the year, we'll be factoring in some of these growth drivers and the implications that they have. If you think about 2027, then I think as you're looking at, okay, how does that translate into 2027? I expect to see acceleration in our total company growth rate.

There's a lot of reasons why we would expect that. But I would say we're probably going to take a little bit more of a conservative approach here in terms of how we've guided historically, at least on the top line. We've maintained, I'd say, a pretty impressive track record for delivering on our EPS targets. I think if you go back for the last six years, we've met or beat our EPS targets every single quarter. If you look at the annual growth rate of what we've been doing to our EPS, it's been around 9% EPS growth. I think we've been really good and strong over there.

As it relates to our top line, I think we've been very good, but I'd say the track record here in the last couple of quarters, or especially during this year, has been a little bit more inconsistent, let's call it like that, and we've fallen short from some of the expectations. I think for 2027, I think we'll set our guidance that's going to create opportunity for us to move up from there in January. I'm not going to give an official guidance here before our January's call, but high level, I'd say forecasting sales to be, as we come out of the gate, pretty similar to this year. I think that just probably feels like the right place to start. Larry, I say that while I acknowledge that we have a lot of new product launches this year.

There's a lot of carryover from the products we launched this year into next year. There's a lot of new products we're launching in 2027. I get that there's probably some comps also, especially in the first half. I get all that, and all of that would obviously say, "Hey, you probably can accelerate your 2027 growth versus your 2026." I strongly feel that that's going to be the case, but I said to start off, I think we'll take a little bit more of a different approach than what we've done in the past, and then we'll be able to kind of go up and move up from there. That being said, we're still going to have great opportunity for gross margin and gross margin expansion. We're still going to have earnings growth. We're still going to be investing in our near and long-term product pipelines.

We're still going to be able to generate real strong cash flows. We'll grow our dividend. All the stuff that you would expect from Abbott, we're going to be doing all of that. I think that's probably the prudent way to start the year, and that's going to give us the opportunity to kind of move up through as the year progresses. 

Thank you. Our next question will come from Patrick Wood from UBS. Your line is open.

Beautiful. Thank you so much for the question. I really appreciate it. I'd love to start on the pipeline and really just dig into that, because obviously, you've got conduction system pacing midterm, Amulet 360, probably 200 billion of biologic drugs going through LOE. There's obviously a lot midterm that's going on. I guess my question is in two parts. A, how do you feel about the forward pipeline today compared to the forward pipeline in the past? How would you rate it? B, as you're thinking about it, not asking you to pick your favorite children, but what do you feel like either gets missed by the market or less attention, but something that's really on your radar and very personally, a big sort of focus area for you? Thanks.

Sure. I love all of our innovations, Pat, so I don't think you're going to get me to go there. I would say, listen, I think the market recognizes the pipeline that Abbott's built. I don't think that there is a misunderstanding of what we're assembling over here. So we can talk about those, but I don't think there's some misunderstanding. I think it's clearly visible to investors that we've got multiple shots we're developing across all of our businesses. Yeah, and some of them will do better than others, but I think all of them will have great contributions to our growth rate. All we need is one or two to kind of completely blow it out, and it kind of changes the entire trajectory. But we're building a pipeline of products organically here that we're anticipating what our customers need, and we're making those investments. 

If you look at the R&D spend for Abbott pre-COVID, we were averaging around $1.7 billion, $1.8 billion. We're crossing $3 billion this year. We'll be increasing that into next year, which was kind of to my comment on 2027. We're going to continue to make our investments. We're going to continue to expand margins, and we can do all that because of how the portfolio's positioned into these very high growth, high margin, and quite frank, a lot of clinical problems to solve. I think you mentioned a couple of them there. I've talked about some of them. I'm excited about, you mentioned right off the get-go, the AVEIR CSP that's going into trial right now, the conduction system pacing leadless product. I'm excited about that because our goal is to completely change how pacemakers have been used in the past.

I think our leadless technology shows that that is possible. We're looking about really building a kind of sustained growth rate here. Many people didn't think that CRM was a growth business. We're showing that with good innovation, good insights, good relationships with accounts, we can drive that. I'm excited about the mitral replacement valve. I've spent some time close to that program, probably a little bit more closer than others, and had opportunity to interact with the KOLs, and I know because I've seen how these things play out. I can read people in terms of how they talk about innovations. You can tell sometimes when an innovation is good, and it'll compete well, and you can tell when a KOL tells you that this is really going to be a game changer, and it's going to change kind of the standard. 

I think our Cephea program's going to do that. We've got a balloon expandable TAVR valve going in. We've got IVL programs on the MedTech. We've got neuromodulation kind of investments that we're making also. We're making investments in our Libre platform, not just on a new diabetes sensor, but also looking at how to use the platform that we've built, the manufacturing, the technology platform, to expand into other analytes. We're going to go into trial with a lactate sensor. I can tell you there's at least five or six that the team is really excited that we're funding and that we're working on. Will all of them hit? Probably not. But if two or three hit, it'll be incredible, I think, to be able to kind of leverage that. I think you mentioned the biosimilars in our EPD business. 

Yeah, there's a significant amount of LOE that's happening in the biologic space, and a lot of these products aren't available in these emerging markets by decisions from the originators. This is going to be a huge opportunity for us to leverage the regulatory, the government, the physician, the distribution relations that we have to bring these products on. You got this business that's been growing at least for the last five years, between 7.5% and 8%, pretty consistently every single quarter. I think that that is going to be very exciting also. On top of that, we're going to get into a bunch of new tests, new personalized diagnostic tests with our cancer diagnostic business. We're going to be reporting data on our MRD test at ESMO. I'm extremely excited about that test.

Abbott Laboratories (ABT) Q3 2026 Earnings Call Transcript

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