ABBOTT LABORATORIES Q2 FY26 earnings call ABT

Management sees strong and stable demand for testing, particularly in U.S. core lab, which grew 7.5%, with hospital labs specifically up 13%. This indicates durable underlying demand for healthcare, not just in the U.S. but globally. Abbott argues that concerns about Medicaid dis-enrollment are less relevant for MedTech, as Medicare is the primary payer for devices (over two-thirds of U.S. cardio business), and high-acuity, life-saving products have inelastic demand. Diagnostic data, even from states with high ACA dis-enrollment, does not show a decline in testing volumes.

Despite a current 9.5% growth rate for the $2 billion quarterly business, Abbott remains highly bullish on the Continuous Glucose Monitoring (CGM) market. There are an estimated 75 million to 80 million people globally who could realistically use a CGM, compared to only 15 million currently, indicating significant untapped opportunity. Reimbursement expansion, particularly for U.S. Type 2 diabetes, which could unlock coverage for around 10 million Medicare beneficiaries, is expected to significantly accelerate growth. Abbott is planning a fifth manufacturing facility, a potential $1 billion investment, to meet future demand, underscoring its confidence in the market's long-term trajectory.

The integration of Exact Sciences is progressing smoothly, with Cologuard sales growing 13% in Q2. Management expects mid-teens growth for the full year, driven by the ramp-up of care gap programs in the second half, which help health systems achieve HEDIS and CMR Star ratings. New Cologuard users are exceeding expectations, and the repeat user funnel is expanding reliably. Abbott aims to be the overall leader in colorectal cancer screening, planning to offer both best-in-class stool (Cologuard) and future best-in-class blood tests, recognizing that blood tests, while more convenient, have lower sensitivity for precancerous polyps but can bring new patients into the screening funnel.

Abbott is gaining significant traction with its new PFA catheters, Volt 2.0, which launched in the U.S. in May and is moving to full market release in Q3, and TactiFlex Duo, whose international rollout is driving over 20% growth in Europe. The company's strategy focuses on selling the 'entire procedure,' including mapping systems and ancillary products, rather than just individual catheters. Management expects to outperform the market and capture share in the second half of the year, with this momentum carrying into next year, further boosted by the potential year-end FDA approval of its new left atrial appendage (LAA) device.

The Nutrition segment is showing strong sequential improvement, tracking ahead of expectations. International Pediatric Nutrition has returned to positive growth of 6.5%, and U.S. Pediatric Nutrition has achieved market leadership in both WIC and non-WIC segments following recent contract wins. Adult Nutrition volumes are responding positively to price actions implemented late last year, with U.S. retail consumption of Ensure increasing double digits compared to the exit of 2025. New product launches, including a collagen protein shake and an infant formula using whole milk, are expected to further reignite growth.

While the international structural heart business demonstrated strong performance with double-digit growth, including TAVR up 30% in the first half, the U.S. franchise faces competitive intensity, particularly in the mitral space. Management is implementing personnel and market approach changes to address these challenges, aiming for the U.S. business to achieve mid- to high single-digit growth by year-end. The pipeline remains robust, with the Cephea mitral replacement valve entering trials and new launches like TriClip in Japan, positioning the segment for long-term growth despite short-term commercial execution needs.