Abbott Laboratories Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Abbott Laboratories' Q3 2025 earnings call highlighted strong organic sales growth, driven by Medical Devices and Established Pharmaceuticals, with a focus on innovation and strategic investments for sustained performance. The company is comfortable with consensus for 2026, emphasizing momentum in the current portfolio, new product launches, and easing headwinds in diagnostics.
Key Financial Results
Organic sales growth of 7.5% excluding COVID test sales.
Earnings per share rose to $1.30, up high single-digits compared to last year, and up double-digits when excluding the impact of the expected large year-over-year decline in COVID test sales that occurred in the third quarter.
Recently launched new products generated nearly $0.5 billion in sales this quarter and added more than 100 basis points to organic sales growth.
Foreign exchange had a favorable year-over-year impact of 1.4% on third quarter sales.
Adjusted gross margin profile was 55.8% of sales.
Adjusted R&D was 6.4% of sales and adjusted SG&A was 26.4% of sales.
Adjusted operating margin was 23% of sales, which reflects an increase of 40 basis points compared to the prior year.
Business Segment Results
Nutrition: Sales increased 4%, led by Adult Nutrition business.
Diagnostics: Modest sales growth, excluding COVID testing sales; Core Lab Diagnostics grew 7% excluding China.
EPD (Established Pharmaceuticals): Sales increased 7%, led by double-digit growth in key 15 markets.
Medical Devices: Sales grew 12.5%, driven by double-digit growth in Diabetes Care, Electrophysiology, Cardiac Rhythm Management, Heart Failure and Structural Heart.
Diabetes Care: Sales of continuous glucose monitors were $2 billion in the quarter and grew 17%.
Capital Allocation
The company has been using its cash for dividends, share buybacks, and debt paydown.
$3 billion of debt to pay down next year.
Making internal investments with manufacturing and some of our digital solutions.
Industry Trends and Dynamics
Favorable demographic and dietary trends, including an increased focus of protein intake and immune system health, continues to fuel growth in Adult Nutrition.
Growing demand for high-quality, affordable medicines is benefitting EPD.
Electrophysiology: Efficacy and efficiency seem to be table stakes right now, and longer term durability of results and safety are becoming quickly the point of competitive differentiation.
Competitive Landscape
Diagnostics: Strong consistent performance outside of China reflects durable underlying demand in markets around the world.
Diabetes Care: Expects to see another real strong year of growth in the US with additional demand coming from the new sensor, the new dual-analyte sensor.
Cardiac Rhythm Management: Outperforming the market for 10 consecutive quarters and driving an acceleration in growth from high single-digits last year to double-digits this quarter.
Structural Heart: Achieved important milestones, including regulatory approval for TriClip in Japan and CE Mark for an expanded indication for Navitor TAVR valve.
Macroeconomic Environment
Challenging market conditions in China, impacting both price and volume, remain a headwind for Core Lab Diagnostic business.
Impact of tariffs on gross margin.
Growth Opportunities and Strategies
Innovation and new product launches are key drivers.
Biosimilars strategy is a key growth pillar for EPD.
Expanding market and capturing share in both the single and dual-chamber pacing segments with AVEIR.
Continue to invest in data and data generation to be able to strengthen the referral pathways to be able to have broader adoption in Structural Heart.
Financial Guidance and Outlook
Expect increasing contributions from new products across the portfolio with a balanced mix of iterative and transformative innovation.
Expect exchange to have a favorable impact of approximately 1.5% on fourth quarter reported sales.
Comfortable with consensus sales and EPS for 2026.
Remain on track to deliver high single-digit organic sales growth and double-digit EPS growth.
