Snapshot
Abbott Laboratories reported $11.14B of revenue in Q2 2025, up 7.4% year over year, with diluted EPS of $1.01 and an operating margin of 18.4%.
- Revenue
- $11.14B
- YoY growth
- +7.4%
- Diluted EPS
- $1.01
- Operating margin
- 18.4%
What management said
- •These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com.
- •Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today.
- •Our sales growth excluded COVID testing sales was 7.5% in the second quarter and 8% in the first half of the year.
- •Our second quarter adjusted earnings per share of $1.26 exceeded the consensus estimate and reflects 11% growth versus the prior year and 16% growth on a sequential basis compared to the first quarter.
- •Growth in the quarter was driven by 6.5% growth in adult nutrition, where Abbott is the global market leader.
- •Together, these represent a projected headwind of around $700 million or 750 basis points on the full year 2025 sales growth in diagnostics.
- •Excluding China, Core Lab Diagnostics grew 8%, reflecting strong underlying demand in the markets around the world.
- •These markets represent the most attractive areas of growth for branded generic medicines.
- •The growth in these markets is supported by favorable long-term healthcare, economic, and demographic trends, including higher birth rates, an expanding middle-class aging population, and growing demand for access to high-quality healthcare solutions.
- •We serve this growing demand by offering a broad portfolio of branded generic medicines tailored to local conditions with a focus on key therapeutic areas.
- •I'll wrap up with medical devices, where sales grew 12%, driven by double-digit growth in diabetes care, heart failure, structural heart, electrophysiology, and cardiac rhythm management.
- •In diabetes care, sales of continuous glucose monitors were $1.9 billion in the quarter and grew 19.5%.
What went well
- •Second-quarter adjusted earnings per share of $1.26 grew 11% versus the prior year, exceeded consensus, and rose 16% sequentially versus the first quarter.
- •Medical devices sales grew 12%, with double-digit growth in diabetes care, heart failure, structural heart, electrophysiology, and cardiac rhythm management.
- •Diabetes care continuous glucose monitor sales reached $1.9 billion in the quarter and grew 19.5%, with U.S. Libre growth of nearly 26%.
- •The company expanded both adjusted gross margin and adjusted operating margin by about 100 basis points versus the prior year in the first half.
- •Established Pharmaceuticals (EPD) grew nearly 8%, with the key 15 markets surpassing $1 billion in quarterly sales for the first time.
- •Achieved pipeline milestones including FDA approval of the Tendyne mitral replacement valve, launch of the Volt PFA catheter, and breakthrough designation for the transfemoral mitral valve replacement product.
What went wrong
- •Diagnostics sales declined 1.5% in the quarter, driven by year-over-year declines in COVID testing sales and the impact of volume-based procurement programs in China.
- •COVID testing declines plus China volume-based procurement represent a projected headwind of roughly $700 million, or about 750 basis points, on full-year 2025 diagnostics sales growth.
- •An expected market volume recovery in China core lab did not materialize in Q2 and was pushed out to Q4.
- •Reductions in U.S. foreign aid funding for HIV testing added to diagnostics headwinds, contributing to over $1 billion of total headwind.
- •Tariffs are now expected to be just under $200 million of impact, and FX remains a year-over-year headwind on EPS of roughly a nickel.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Adjusted EPS | Q3 2025 | — | $1.28 to $1.32 | Initiated |
| FX impact on reported sales | FY 2025 | Headwind | Relatively neutral | Improved |
| FX impact on reported sales | Q3 2025 | — | Approximately +2% favorable | Favorable |
| Tariff impact | FY 2025 | Higher prior estimate | Just under $200 million | Reduced |
| Organic sales growth (full-year framework) | FY 2025 | — | High single-digit growth | Reaffirmed |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total company sales | +6.9% (or +7.5% excluding COVID testing) | Broad-based growth led by medical devices and pharma, partly offset by diagnostics declines. |
| Nutrition | +3.5% | Driven by 6.5% growth in adult nutrition on strong Ensure and Glucerna demand. |
| Diagnostics | -1.5% | Year-over-year decline in COVID testing sales and China volume-based procurement; Core Lab grew 8% excluding China. |
| Established Pharmaceuticals (EPD) | +~8% | Strong performance in the key 15 markets which surpassed $1 billion in quarterly sales for the first time. |
| Medical devices | +12% | Double-digit growth across diabetes care, heart failure, structural heart, electrophysiology, and cardiac rhythm management. |
| Diabetes care (CGM) | +19.5% | Strong Libre demand across intensive insulin, basal, and non-insulin user segments; U.S. Libre up nearly 26%. |
| Structural Heart | +12% | Continued TAVR share gains, strong TriClip adoption, and contributions from Amulet and MitraClip. |
| Cardiac rhythm management | +10% | Strong uptake of the AVEIR leadless pacemaker in single- and dual-chamber segments. |
| Heart failure | +14% | Double-digit growth in ventricular assist devices and CardioMEMS. |
| Vascular | +3.5% | Double-digit growth in vascular imaging and vessel closure products plus Esprit contributions. |
| Neuromodulation | +4% | Strong Eterna rechargeable spinal cord stimulation performance in international markets. |
| Adjusted gross margin | +100 bps to 57% of sales | Margin expansion versus prior year. |
| Adjusted operating margin | +100 bps to 22.9% of sales | Margin expansion versus prior year. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Diagnostics headwinds (COVID testing, China VBP, HIV funding) | China price impact already in guidance; volume recovery expected | Over $1 billion headwind; viewed as transitory and to be lapped in 2026 | rising |
| Diabetes care / Libre and dual-analyte (ketone) sensor | Established Libre franchise across segments | Nearly 26% U.S. Libre growth; dual-analyte sensor seen as next-level catalyst for share gains | rising |
| Electrophysiology and Volt PFA catheter | Faced a portfolio gap; mapping share gains | Double-digit EP growth with U.S. acceleration; Volt rolling out internationally | rising |
| AVEIR leadless pacemaker / CRM | CRM growth 7% in 2023 and 2024 | 8% first-half growth, 10% this quarter; trained physicians up ~50%, implants per day doubled | rising |
| Structural Heart (TAVR, mitral, Amulet) | Investing across mitral, tricuspid, TAVR | Navitor sales doubled over two years; Tendyne approved; doubling U.S. TAVR sales team | rising |
| Tariffs and supply-chain mitigation | Discussed in April call | Impact reduced to under $200 million; multiple work streams and a new U.S. cardiovascular site planned | steady |
| M&A strategy | — | Favorable environment; selective focus on diagnostics and devices with attractive returns | steady |
| Biosimilars in emerging markets | — | 10 regulatory submissions completed; launches projected to begin in 2026 | rising |
| 2026 outlook | — | Confident in high single-digit sales and double-digit EPS as diagnostics headwinds lap | steady |
Q&A summary
How should we contextualize 2025 performance, which headwinds are transient versus permanent, and what does that imply for next year? (David Roman, Goldman Sachs)
Ford framed the year as devices up over 12% and pharma up 8% in the first half, with the main challenges being COVID testing drop-off, China core lab disruption, and reduced U.S. HIV testing funding totaling over $1 billion of headwind. Even so, Abbott still expects high single-digit growth while absorbing under $200 million of tariffs, and views these headwinds as transitory, leaving 2026 well set up for high single-digit sales and double-digit EPS.
Is there a scenario where these one-time headwinds reverse and growth accelerates into 2026? (David Roman, Goldman Sachs)
Ford said there is definitely a scenario where the growth rate could accelerate as headwinds reverse and pipeline drivers like electrophysiology kick in, though he said it was a bit early to commit to that.
What trends are you seeing in diabetes (including ketone integration) and EP, especially with Volt launching outside the U.S.? (Robbie Marcus, JPMorgan)
Ford cited nearly 26% U.S. Libre growth with momentum across intensive insulin, basal (~70% global share), and non-insulin segments. He said the dual-analyte ketone sensor will be a significant next-level change, opening SGLT2 use for type 1s. On EP, double-digit growth accelerated in the U.S., and Volt is launching in a focused fashion internationally with excellent early feedback on contact mapping and efficacy.
Where are we in the AVEIR/CRM conversion cycle and is this growth sustainable? (Vijay Kumar, Evercore ISI)
Ford said AVEIR has fundamentally changed CRM's growth trajectory, from 7% in 2023 and 2024 to 8% in the first half and 10% this quarter, in a $4 billion pacing market. Trained physicians rose about 50% and implants per day doubled; a next-generation AVEIR with 25% longer battery life and a conduction system pacing pivotal trial in 2026 should support continued outperformance, with the product now launched in 50 countries.
EPS guidance: the top end was lowered $0.05 and the midpoint maintained despite lower margins and organic; where are the offsets between operational, FX, and tariffs? (Vijay Kumar, Evercore ISI)
Boudreau explained that sales drivers were de-risked and FX at current rates is neutral on the top line but still a year-over-year headwind on the bottom line of roughly a nickel due to inventory mechanics, while tariffs of just under $200 million roll through inventory in the second half.
How is the M&A pipeline shaping up in diagnostics and med tech, and could Abbott do a more sizable deal? (Travis Steed, BofA Securities)
Ford called it a good environment with strong opportunities, but said a robust organic pipeline lets Abbott be selective and focus on strategically fitting, attractive-return deals rather than just adding top line. He confirmed the 2026 EPS view reflects what is known now on FX and tariffs, with multiple mitigation work streams and a planned new U.S. cardiovascular manufacturing site.