Abbott Laboratories Earnings - Q4 2025 Analysis & Highlights
Abbott Laboratories' Q4 2025 earnings call highlighted strong performance in Medical Devices and EPD, challenges in Nutrition, strategic acquisitions, and a positive outlook for 2026 driven by innovation and operational excellence.
Key Financial Results
Adjusted earnings per share was $1.50, reflecting 12% growth compared to the prior year.
Foreign exchange had a favorable year-over-year impact of 1.4% on fourth quarter sales.
The adjusted gross margin profile was 57.1% of sales, an increase of 20 basis points compared to the prior year despite the impact of tariffs.
Adjusted R&D was 6.2% of sales.
Adjusted SG&A was 25.1% of sales.
Adjusted operating margin was 25.8% of sales, reflecting an increase of 150 basis points compared to the prior year.
Business Segment Results
Nutrition sales declined in the quarter.
Diagnostics sales declined 3.5% due to an anticipated year-over-year decline in COVID testing sales.
Core Lab Diagnostics grew 3.5%, achieving a third consecutive quarter of accelerating growth.
For the full year, excluding China, Core Lab Diagnostics growth was 7%.
Point of Care Diagnostics sales grew 7% in the quarter, driven by the adoption of their high-sensitivity troponin test.
EPD sales increased 7% in the quarter, with well-balanced growth across markets and therapeutic areas, including double-digit growth in India, Latin America, and the Middle East.
EPD delivered its fifth consecutive year of sales growth exceeding 7%.
Medical Devices sales grew 10.5%.
Diabetes Care sales of continuous glucose monitors grew 12% in the fourth quarter and 17% for the year, with sales in 2025 exceeding $7.5 billion.
CGM sales have grown by more than $1 billion for the third consecutive year.
In Electrophysiology, sales grew double-digits in the US and internationally.
Structural Heart growth was driven by double-digit growth in Navitor, TriClip, and MitraClip.
Heart Failure growth of 12% was driven by ventricular assist devices and CardioMEMS.
Rhythm Management growth of 12% was led by the strong uptake of the leadless pacemaker AVEIR.
For the full year, Rhythm Management growth of 10% represents the third consecutive year of significantly outperforming the market.
Vascular growth of 6.5% was led by double-digit growth in vessel closure products and growth from Esprit, their below-the-knee resorbable stent.
For the full year, Vascular sales grew 5%, marking the second consecutive year of mid-single-digit growth.
Neuromodulation growth of 5.5% was led by strong international growth of Eterna, their rechargeable spinal cord stimulation device.
Capital Allocation
Abbott is committed to a growing dividend and announced it again for 2026.
Post-close of the Exact Sciences acquisition, the gross debt to EBITDA ratio will be around 2.7 times, indicating plenty of capacity.
The primary focus in the near-term is on integrating Exact Sciences.
Any future additions will likely be tuck-in type size deals.
Industry Trends and Dynamics
The US pediatric nutrition business is experiencing an impact from market share loss, partly due to the loss of a large WIC contract last year.
The Nutrition business faces a broader challenge of reigniting volume growth, a dynamic many consumer goods businesses are experiencing.
Higher manufacturing costs in Nutrition led to higher prices, which are suppressing demand as consumers become more price-sensitive.
The $10 billion Rhythm Management market presents a significant opportunity to capture market share and drive sustainable growth.
The CGM market still has significant opportunities for penetration across intensive insulin users, basal insulin users, and non-insulin users globally.
There is strong support for expanding CGM use to non-insulin users in the US, backed by clinical data showing improved A1c and time in range.
The multi-cancer early detection market is seen as a very large segment with significant growth opportunities, potentially becoming a routine test similar to lipid panels.
Competitive Landscape
Abbott's success in CGM is driven by a leading position in cost and scale and a commitment to market-leading innovation.
In Electrophysiology, Abbott aims to provide a toolbox approach for physicians with choices and flexibility in products like Volt and TactiFlex Duo.
Abbott believes it is well-positioned in Electrophysiology with a complete portfolio, including RF and PFA products, diagnostic elements, and an LAA device.
The GKS sensor is expected to provide a differentiated product for market share shift in the pumper segment, where Abbott is currently underrepresented.
The GKS sensor also has the potential for market expansion, as only about 1 million of 6 million SGLT2 users in the US are on CGMs.
AVEIR is currently about 10% penetrated in the global low-voltage or pacing segment market, indicating early innings for growth.
The US single-chamber pacing market, which is about 15% of the total market, is about 50% penetrated.
Macroeconomic Environment
Manufacturing costs in Nutrition have risen over the last several years, partly due to a post-pandemic surge in commodity costs.
The implementation of new tariffs and heightened market challenges in China impacted 2025 earnings.
Higher prices in the current economic environment have become a factor in constraining volume growth in Nutrition.
The macro landscape for EPD is becoming more complicated, but the team has shown resilience in navigating challenges.
Growth Opportunities and Strategies
Innovation continues to be the foundation of Abbott's success.
In 2025, Abbott achieved regulatory approvals for Volt and TactiFlex Duo PFA products, a new indication for Navitor TAVR valve, and CMS national coverage for TriClip and CardioMEMS.
Abbott completed enrollment in its pivotal trial for a new LAA device and filed for FDA approval for its dual glucose-ketone sensor.
The company initiated the pivotal trial of its Coronary IVL device and started the launch sequence in EPD to bring biosimilars to emerging markets.
Abbott is launching new products in Nutrition to meet evolving consumer preferences, with at least eight new products expected over the next 12 months.
Abbott began implementing price and promotion initiatives in Q4 to reignite volume growth in Nutrition.
The company is increasing its focus on innovation in Nutrition, an area that was deprioritized in recent years.
The acquisition of Exact Sciences will allow Abbott to enter and lead in the fast-growing cancer diagnostics market and adds a new high-growth business with an attractive pipeline.
Abbott's investment strategy in Medical Devices involves sustaining strong performance in high-growth segments like Diabetes, Structural Heart, Electrophysiology, and Heart Failure, and increasing growth in foundational segments like Rhythm Management and Vascular.
The expected approval of the Coronary IVL device next year is anticipated to accelerate growth in Vascular.
The new product pipeline is highly productive and, combined with strategic actions, positions the company for accelerating growth in 2026.
Abbott is launching the PFA product line into a larger installed base of capital and mapping systems.
The Volt launch in Europe has been successful, with positive feedback on its elegance, ease, and the potential for procedures with sedation versus general anesthesia.
The launch of Volt in the US and TactiFlex Duo internationally is planned for this year.
Abbott is making investments in other areas of the Rhythm Management portfolio to support market share gains and differentiated growth.
The company is bringing its biosimilar portfolio into emerging markets, which is the fastest-growing generic segment.
In Structural Heart, Abbott has a best-in-class portfolio across three valves and upcoming growth catalysts.
Label expansions for Navitor and MitraClip, along with next-generation repair technology for MitraClip and TriClip, are expected to drive growth.
TriClip received approval in Japan, opening a new market.
Abbott acquired LARALAB, an AI-powered imaging interventional cardiology company, to integrate into product offerings for pre-procedural planning.
The pipeline for Structural Heart includes a next-generation Amulet launching early next year and an IDE trial for a balloon TAVR in the second half of this year.
An IDE trial for a transfemoral, transseptal mitral valve replacement program is also planned.
Financial Guidance and Outlook
Abbott forecasts the midpoint of its 2026 organic sales growth range to be 7% and the midpoint of its adjusted earnings per share range to reflect 10% growth.
Guidance for full year adjusted earnings per share is $5.55 to $5.80, reflecting 10% growth at the midpoint.
The adjusted earnings per share forecast for the first quarter is $1.12 to $1.18.
Organic sales growth for the year is forecast to be in the range of 6.5% to 7.5%.
Foreign exchange is expected to have a favorable impact of around 1% on full year reported sales and around 3% on first quarter reported sales.
The adjusted tax rate is forecast to be in the range of 15% to 16%.
Nutrition performance is expected to remain challenged in the first half of the year, with a return to growth in the second half.
The 0.5% lower top-line guidance compared to consensus is primarily due to the near-term outlook for the Nutrition business.
EPS is in line with consensus, with expectations for healthy margin expansions.
The Core Diagnostic headwinds faced in 2025 (COVID and China challenges) are mostly expected to be behind the company in 2026.
COVID testing sales are forecast to be around $200 million in 2026, with no significant growth or decline expected.
The vast majority of sales in China have gone through the VBP in 2025, so the impact is largely felt.
Diagnostics business is expected to see a nice acceleration due to lapping headwinds and continued market share gains outside of China.
Operating margins are expected to improve by 50 to 70 basis points every year through gross margin expansion and P&L leverage.
The Exact Sciences acquisition is expected to add a $3 billion-plus business growing 15%.
The Nutrition business is expected to return to positive growth after a couple of challenging quarters.
The MedTech procedure environment is not showing signs of slowing, with strong volumes across all categories in Q4.
The outlook for Diagnostics in China is expected to be stable, allowing other parts of the portfolio to accelerate.
US, Latin America, and European Diagnostics businesses are performing well and capturing market share.
The overall Diagnostics business is expected to achieve mid-single-digit growth this year, accelerating to 7% to 8% if China is removed.
Abbott is not baking in the non-insulin user reimbursement opportunity for CGM into its guidance yet but is prepared to execute if it materializes.
