Earnings Call Insights: Abbott Laboratories (ABT) Q3 2025
Management View
- Robert Ford, Chairman and CEO, reported organic sales growth of 7.5% excluding COVID test sales, highlighting double-digit growth in Medical Devices and high single-digit growth in Established Pharmaceuticals. Ford noted, “Our performance continues to be driven by innovation, positioning Abbott to consistently deliver high-quality results and durable long-term value to our shareholders.” Recently launched products generated nearly $0.5 billion in sales for the quarter and added more than 100 basis points to organic sales growth.
- Ford detailed a 4% sales increase in Nutrition, led by strong international demand for Ensure and Glucerna. New launches include a Glucerna version with only 1 gram of sugar and an upcoming Ensure version with 42 grams of protein. Diagnostics saw modest growth, with Core Lab Diagnostics outside China growing 7%, and 8% growth in Point of Care Diagnostics.
- Medical Devices sales grew 12.5%, with Diabetes Care continuous glucose monitors generating $2 billion and growing 17%. Ford highlighted, “The launch of our new Volt PFA catheter in Europe continues to go very well and helped deliver double-digit growth in ablation catheters and international markets this quarter.”
- CFO Philip Boudreau stated, “Sales increased 5.5% or 7.5% when excluding COVID testing-related sales. Adjusted earnings per share of $1.30 was in line with the consensus estimate.” Boudreau added that adjusted gross margin was 55.8% of sales, reflecting a decrease due to tariffs, but adjusted operating margin increased by 40 basis points to 23%.
Outlook
- Management reiterated expectations for high single-digit organic sales growth and double-digit EPS growth. Ford stated, “We remain on track to deliver high single-digit organic sales growth and double-digit EPS growth.”
- Ford expressed continued confidence for 2026, saying, “I was comfortable with delivering that type of growth at this time last year, and I’m comfortable again today forecast and deliver that type of growth next year.”
- The company expects easing of diagnostic headwinds in China and tariffs, increased contributions from new product launches in 2026, and ongoing momentum in high-growth products such as AVEIR, TAVR, Libre, and TriClip.
Financial Results
- Adjusted earnings per share was $1.30, as explicitly stated by Boudreau.
- Sales increased 5.5% overall or 7.5% when excluding COVID-related testing. Foreign exchange had a favorable impact of 1.4%.
- Adjusted gross margin was 55.8%, down from the prior year, attributed to tariff impacts, while adjusted operating margin rose to 23%.
- Medical Devices, Diabetes Care, and international markets in Nutrition and EPD were major drivers of growth. Continuous glucose monitors reached $2 billion in sales, up 17%.
Q&A
- Larry Biegelsen, Wells Fargo: Asked about comfort with consensus sales and EPS for 2026. Ford responded, “I’m very comfortable with consensus… I feel very confident and comfortable with that type of top line growth.”
- Robert Marcus, JPMorgan: Queried about U.S. diabetes growth and Volt catheter feedback. Ford explained U.S. Libre growth was 19% with year-to-date at 25%, noting strong demand and restocking dynamics. He stated, “I expect to see another real strong year of growth in the U.S. with additional demand coming from the new sensor, the new dual-analyte sensor.”
- David Roman, Goldman Sachs: Focused on diagnostics headwinds and margin trajectory. Ford described VBP in China as the primary headwind but noted improvement in volume and recovery signs outside China. Boudreau addressed gross margin pressure from tariffs and maintenance but highlighted ongoing mitigation efforts.
- Vijay Kumar, Evercore ISI: Asked about China growth and CRM penetration. Ford reported China now represents less than 6% of total revenue, with EPD and Nutrition up double digits, and CRM single chamber about 50% penetrated, dual chamber sub-10%.
- Danielle Antalffy, UBS: Inquired on left atrial appendage closure and diabetes basal penetration. Ford emphasized investment in next-gen Amulet and tackling awareness and access barriers for CGM in the U.S.
- Joanne Wuensch, Citi: Questioned NEC litigation and Nutrition softness. Ford declined specifics on litigation but reaffirmed product safety, and attributed U.S. pediatric Nutrition share loss to competition and WIC contract shifts.
Sentiment Analysis
- Analysts maintained a constructive tone but pressed for clarity on U.S. diabetes growth, diagnostics headwinds, and product launches, reflecting a neutral to slightly positive sentiment with focus on sustainability.
- Management’s tone was confident and assertive in both prepared remarks and Q&A. Ford used phrases like “I feel very confident and comfortable,” and “The portfolio has been pretty resilient,” indicating strong confidence.
- Compared to the previous quarter, management’s confidence remains high, with increased emphasis on overcoming headwinds and highlighting new product launches. Analysts’ tone was consistent, with recurring focus on growth sustainability and margin impacts.
Quarter-over-Quarter Comparison
- Guidance language remains consistent with the prior quarter, reaffirming high single-digit sales and double-digit EPS growth targets.
- Strategic focus shifted toward expanding product launches and mitigating headwinds in diagnostics and tariffs, while highlighting new regulatory approvals in Medical Devices.
- Key metrics saw sustained growth in Medical Devices and EPD, while gross margin declined sequentially due to tariffs.
- Management confidence and messaging remain strong, with additional details on new product trajectories and mitigation of China and tariff impacts compared to Q2.
- Analysts continued to focus on product-level growth, China, and margin sustainability.
Risks and Concerns
- Management cited ongoing headwinds in diagnostics, especially related to China’s VBP and DRG changes.
- Tariffs continue to impact gross margin, though mitigation strategies are in place.
- Analysts raised concerns about U.S. diabetes market dynamics, competition in Nutrition, and China macroeconomic challenges.
- Litigation in Nutrition (NEC) is ongoing, with Ford maintaining the company’s commitment to defending the product.
Final Takeaway
Abbott management emphasized another strong quarter of innovation-led growth, with Medical Devices and key international markets as standout performers. The company outlined a clear path for continued high single-digit organic sales and double-digit EPS growth into 2026, supported by a robust pipeline, new product launches, and easing headwinds in diagnostics and tariffs. Management’s confidence in future performance was reinforced by strong execution across business segments and ongoing investment in product development and market expansion.