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    ABT
    Earnings call· Sep 2025(Q3 FY25)

    ABBOTT LABORATORIES ABT

    Oct 15, 2025 Source

    Executive summary

    Abbott Q3 FY25 — Strong Medical Device Growth and Positive 2026 Outlook

    Abbott delivered a strong Q3 FY25, driven by robust performance in Medical Devices and Established Pharmaceuticals, despite headwinds in China Diagnostics and U.S. Pediatric Nutrition. The company remains confident in its ability to sustain high single-digit top-line and double-digit EPS growth into FY26, fueled by new product launches and easing prior-year comparables. Management emphasized continued investment in its pipeline and a resilient, diversified portfolio.

    Highlights

    5

    • Organic sales grew 7.5% excluding COVID test sales, driven by double-digit growth in Medical Devices.

    • Medical Devices sales grew 12.5%, led by strong performance across Diabetes Care, Electrophysiology, Cardiac Rhythm Management, Heart Failure, and Structural Heart.

    • Adjusted EPS rose to $1.30, up double digits when excluding the impact of the expected large year-over-year decline in COVID test sales.

    • Recently launched new products generated nearly $0.5 billion in sales this quarter and added over 100 basis points to organic sales growth.

    • Cardiac Rhythm Management grew 13%, outperforming the market for 10 consecutive quarters, driven by strong uptake of the AVEIR leadless pacemaker.

    Concerns

    3

    • Challenging market conditions in China impacted Core Lab Diagnostics, affecting both price and volume.

    • Adjusted gross margin was 55.8% of sales, reflecting a decrease compared to the prior year due to the impact of tariffs.

    • U.S. Pediatric Nutrition sales were impacted by competitive share loss and the movement of a large WIC contract to a competitor.

    Guidance & targets

    10
    CategoryTargetConfidence
    Organic sales growth
    high single-digit
    high materiality
    High
    EPS growth
    double-digit
    high materiality
    High
    Organic sales growth
    7.5%
    high materiality
    High
    EPS growth
    10%
    high materiality
    High
    Diabetes Care U.S. growth
    real strong year of growth
    medium materiality
    High
    CMS coverage for Type 2 non-insulin
    not in base forecast
    medium materiality
    Low
    Electrophysiology growth
    much better
    medium materiality
    High
    China growth (excluding Diagnostics)
    mid-single digits
    medium materiality
    Medium
    Debt paydown
    $3 billion
    medium materiality
    High
    Gross margin profile
    57%
    medium materiality
    High

    Segment performance

    16
    SegmentRevenueYoYQoQMargin
    Total Company
    Organic sales growth, excluding COVID test sales.
    		—7.5%——
    Nutrition
    Led by Adult Nutrition business.
    		—4%——
    Adult Nutrition (International)
    Strong demand for Ensure and Glucerna.
    		—10%——
    Diagnostics
    Modest sales growth excluding COVID testing sales.
    		—modest——
    Core Lab Diagnostics (Excluding China)
    U.S. showed acceleration in growth compared to H1.
    		—7%——
    Point of Care Diagnostics
    Driven by adoption of concussion test and high-sensitivity troponin test.
    		—8%——
    Established Pharmaceuticals (EPD)
    Led by double-digit growth in key 15 markets.
    		—7%——
    Medical Devices
    Driven by double-digit growth across multiple segments.
    		—12.5%——
    Diabetes Care
    Sales of continuous glucose monitors.
    Continuous glucose monitors sales: $2 billion
    		$2 billion17%——
    Diabetes Care (U.S.)
    Year-to-date growth of 25%. Q3 growth impacted by H1 shelf restocking dynamics.
    		—19%——
    Electrophysiology
    Double-digit growth in U.S. and internationally. Ablation catheters grew double digits in international markets.
    		—double digits——
    Structural Heart
    Led by share gains in TAVR and growing adoption of TriClip.
    		—11%——
    Cardiac Rhythm Management
    Led by strong uptake of AVEIR leadless pacemaker. Outperformed market for 10 consecutive quarters.
    		—13%——
    Heart Failure
    Driven by growth across ventricular assist devices and CardioMEMS.
    		—12%——
    Vascular
    Led by vessel closure products and increasing contributions from Esprit stent.
    		—5%——
    Neuromodulation
    Led by strong performance of Eterna rechargeable spinal cord stimulation device in international markets.
    		—7%——

    Operational metrics

    18
    Adjusted gross margin
    55.8%decrease compared to prior year
    Q3 FY25

    Reflects impact of tariffs and normal plant operational maintenance shutdowns.

    Adjusted R&D as % of sales
    6.4%
    Q3 FY25

    Adjusted R&D expense as a percentage of sales.

    Adjusted SG&A as % of sales
    26.4%
    Q3 FY25

    Adjusted SG&A expense as a percentage of sales.

    Adjusted operating margin
    23%increase of 40 basis points compared to prior year
    Q3 FY25

    Adjusted operating margin as a percentage of sales.

    FX impact on sales
    1.4%favorable year-over-year impact
    Q3 FY25

    Less favorable than forecasted.

    FX impact on sales
    1.5%favorable
    Q4 FY25

    Expected impact based on current rates.

    New product sales
    $0.5 billion
    Q3 FY25

    Sales generated by recently launched products.

    New product contribution to organic sales growth
    100
    Q3 FY25

    Contribution to organic sales growth from recently launched products.

    Clinical trials planned
    200
    FY26

    Number of clinical trials across all businesses and geographies.

    U.S. basal segment penetration
    20%
    current

    Penetration rate for continuous glucose monitors in the basal segment.

    International basal segment penetration
    <5%
    current

    Penetration rate for continuous glucose monitors in the basal segment.

    Low-voltage pacing market size
    $4 billion
    current

    Estimated total market size.

    AVEIR single chamber penetration
    50%
    current

    Penetration rate for AVEIR in the single chamber pacing segment.

    AVEIR dual chamber penetration
    <10%
    current

    Penetration rate for AVEIR in the dual chamber pacing segment.

    China revenue as % of total
    <6%down from 9-10% 10 years ago
    current

    China's contribution to total Abbott revenue.

    China EPD and Nutrition growth
    double digits
    YTD Q3 FY25

    Growth rate for Established Pharmaceuticals and Nutrition businesses in China.

    China Cardio, Neuro growth
    sequential step-up
    YTD Q3 FY25

    Sequential growth observed in Cardio and Neuro businesses in China.

    Gross margin expansion
    60
    YTD Q3 FY25

    Year-to-date gross margin expansion.

    Industry KPIs

    7
    MetricValueDetails
    Tariff impact—
    New product launch ramp—
    FCF conversion leverage guidance$3 billionUSD
    Installed base system placements—
    Segment franchise organic growth12.5%%
    Indicated addressable patient population$4 billionUSD
    Pivotal trial clinical evidence milestonesVANTAGE study data

    Product announcements

    6
    ProductTypeDetails
    Glucernaupdate
    Ensurelaunch
    Volt PFA catheterlaunch
    TriClipmilestone
    Navitor TAVR valvemilestone
    Esprit below-the-knee resorbable stentmilestone

    Deals & partnerships

    1
    AI-powered imaging software companySpecializes in interventional cardio preprocedure planning.

    Acquired a European AI-powered imaging software company specializing in interventional cardio preprocedure planning, integrating the team into Abbott's programs.

    Risks & headwinds

    4
    China Core Lab Diagnostics market conditionsQ3 FY25, ongoing

    impacted price and volume

    Mitigation: Teams navigating challenges, seeing initial volume pickup; expect headwind to minimize in Q4 FY25 and a recovery in FY26.

    Tariff impact on gross marginQ3 FY25, full year effect next year

    decrease in adjusted gross margin

    Mitigation: Dedicated teams working on tariff mitigation and generating ideas for gross margin expansion.

    U.S. Pediatric Nutrition competitive pressureQ3 FY25, next couple of quarters

    share loss, WIC contract loss

    Mitigation: Won two new WIC contracts (effective Q1/Q2 FY26) and planning several new product launches to regain share.

    COVID test sales declineQ3 FY25, ongoing

    large year-over-year decline

    Mitigation: Expected to be fully lapped next year, easing headwinds.

    What to watch in Q4 FY25

    5

    China Diagnostics recovery

    Q4 FY25 / FY26
    CurrentChallenging market conditions, initial signs of volume pickup
    TargetMinimized headwind, continued volume recovery

    Why it matters

    Recovery in China Diagnostics is crucial for overall Diagnostics business acceleration and easing company-wide headwinds.

    I think that if you look at some of the dynamics that we're seeing in some of the accounts, we're starting to see a little bit now of some of that volume start to repick up. I'm not going to say that it's fully back, but I'm encouraged to see some of the signs start to pick up in terms of volume there.

    Q&A highlights

    5

    Is management still comfortable with FY26 consensus sales (7.5%) and EPS (10%) given current tailwinds?

    Robert Ford expressed strong comfort with FY26 consensus, citing current portfolio momentum, a strong cadence of new product launches (Volt U.S., dual-analyte sensor, Alinity m, biosimilars), and easing headwinds from China diagnostics and COVID testing. He emphasized continued investment in the pipeline (200 clinical trials, pivotal trials for future products) while maintaining top and bottom-line growth.

    “I'm 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.”

    asked by Larry Biegelsen · answered by Robert Ford

    2 min read7 chapters

    Detailed Narrative

    01

    Innovation and New Product Impact

    Abbott's growth is significantly fueled by innovation, with recently launched products contributing nearly $0.5 billion in sales and over 100 basis points to organic sales growth this quarter. The company anticipates increasing contributions from a balanced mix of iterative and transformative innovations across its portfolio, including upcoming launches like Volt in the U.S., TactiFlex Duo, and a new Alinity m diagnostic system.

    02

    Strategic Investments in Pipeline

    Management emphasized an unwavering commitment to investing in the pipeline, planning close to 200 clinical trials across various businesses and geographies next year. Key pivotal trials are being initiated for future significant contributors, including a mitral valve replacement trial, balloon TAVR, AVEIR conduction system pacing, peripheral IVL, and a continuous lactate monitor sensor.

    03

    China Market Dynamics and Recovery

    While China presented headwinds for Core Lab Diagnostics due to VBP pricing and DRG model changes, management observed initial signs of volume recovery in some accounts. The company expects the headwind to minimize in Q4 FY25 and anticipates a 'nice recovery year' for Diagnostics in FY26, driven by continued acceleration outside China and the lapping of VBP impacts.

    04

    Diabetes Care Momentum and Future Opportunities

    U.S. Diabetes Care grew 19% in Q3, with full-year U.S. growth still expected to exceed 20%. Future growth drivers include the new dual-analyte sensor for intensive insulin users and significant untapped potential in the basal segment (20% penetrated in U.S., <5% internationally). Potential CMS coverage for Type 2 non-insulin users is seen as an opportunity, though not yet factored into the base FY26 forecast.

    05

    Electrophysiology and Volt PFA Catheter

    Electrophysiology growth accelerated, with the Volt PFA catheter launch in Europe receiving positive feedback, particularly for its focused energy delivery minimizing hemolysis risk and integration with Ensite for real-time contact visualization. The latter enables conscious sedation, offering flexibility for healthcare systems. Abbott aims for an earlier U.S. approval for Volt, expecting it to significantly boost EP performance in FY26.

    06

    Cardiac Rhythm Management Transformation

    The CRM business has transformed from flat growth five years ago to double-digit growth this quarter, outperforming the market for 10 consecutive quarters. This is largely driven by the AVEIR leadless pacemaker, which is expanding the market and gaining share in both single (50% penetrated) and dual (sub-10% penetrated) chamber pacing segments. Abbott aims to convert a significant portion of the estimated $4 billion low-voltage pacing market and become a market leader.

    07

    Structural Heart Leadership and Pipeline

    Abbott maintains a strong #2 position in the cardiovascular medtech market, driven by its robust Structural Heart portfolio including MitraClip, TriClip, Navitor, and Amulet. Multiple catalysts are expected to sustain double-digit growth, such as label expansions, new product generations (fifth-gen MitraClip/TriClip), and the launch of TriClip in Japan. The next-generation Amulet device and a promising mitral replacement valve program are key pipeline assets.

    AI-generated summary of the company’s earnings call. Not investment advice.