Snapshot
Abbott Laboratories reported $11.37B of revenue in Q3 2025, up 6.9% year over year, with diluted EPS of $0.94 and an operating margin of 18.1%.
- Revenue
- $11.37B
- YoY growth
- +6.9%
- Diluted EPS
- $0.94
- Operating margin
- 18.1%
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.
- •Today, we reported organic sales growth of 7.5% excluding COVID test sales.
- •Recently launched new products generated nearly half a billion dollars in sales this quarter and added more than 100 basis points to organic sales growth.
- •Strong brand recognition, combined with favorable demographic and dietary trends, including an increased focus on protein intake and immune system health, continues to fuel our growth.
- •Growth in adult nutrition was driven by 10% growth in international markets, where we continue to see strong demand for both Ensure and Glucerna.
- •To support future growth, we continue to invest in these well-known brands to ensure they evolve along with changing consumer preferences.
- •Moving to diagnostics, we saw modest sales growth in the quarter excluding COVID testing sales.
- •Excluding China, core lab diagnostics grew 7%, with markets such as the U.S.
- •showing an acceleration in growth in the third quarter compared to the growth in the first half of this year.
- •Our strong, consistent performance outside of China reflects durable underlying demand in markets around the world.
- •Turning to EPD, sales increased 7%, led by double-digit growth in our key 15 markets, highlighting broad-based demand and strong commercial execution.
What went well
- •Organic sales grew 7.5% excluding COVID test sales, led by double-digit growth in medical devices and high single-digit growth in Established Pharmaceuticals.
- •Adjusted earnings per share rose to $1.30, up high single digits year over year and up double digits when excluding the expected decline in COVID test sales.
- •Medical devices sales grew 12.5%, with double-digit growth in diabetes care, electrophysiology, cardiac rhythm management, heart failure, and structural heart.
- •Continuous glucose monitor sales reached $2 billion in the quarter and grew 17%, with U.S. diabetes care up 19%.
- •Recently launched new products generated nearly half a billion dollars in sales and added more than 100 basis points to organic sales growth.
- •Adjusted operating margin reached 23% of sales, an increase of 40 basis points versus the prior year, with year-to-date gross margin expansion of about 60 basis points.
What went wrong
- •Challenging market conditions in China, affecting both price and volume, remained a headwind for the core lab diagnostics business.
- •Adjusted gross margin declined to 55.8% of sales versus the prior year due to the impact of tariffs.
- •U.S. pediatric nutrition gave back share captured last year and lost a large WIC state contract to a competitor, expected to pressure U.S. pediatric growth for the next couple of quarters.
- •Foreign exchange provided a 1.4% favorable impact on third quarter sales, less favorable than forecasted at the July earnings call.
- •U.S. diabetes care saw a slight miss as first-half growth was inflated by shelf restocking that pulled forward a couple of percentage points of growth.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Organic sales growth | Full year 2025 | — | High single-digit | Reaffirmed |
| EPS growth | Full year 2025 | — | Double-digit | Reaffirmed |
| Foreign exchange impact on reported sales | Q4 2025 | — | Approximately 1.5% favorable | New |
| U.S. diabetes care growth | Full year 2025 | — | Over 20% | On track with original assumption |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Nutrition | +4% | Led by adult nutrition with 10% international growth in Ensure and Glucerna; partly offset by U.S. pediatric share losses. |
| Diagnostics (ex-COVID) | Modest growth | China price and volume pressure from VBP and DRG changes; core lab diagnostics grew 7% excluding China. |
| Point-of-care diagnostics | +8% | Growing adoption of the point-of-care concussion test and high-sensitivity troponin test. |
| Established Pharmaceuticals (EPD) | +7% | Double-digit growth in key 15 markets across gastroenterology, cardiometabolic, and pain management; biosimilar progress. |
| Medical devices | +12.5% | Double-digit growth across diabetes care, electrophysiology, cardiac rhythm management, heart failure, and structural heart. |
| Diabetes care (CGM) | +17% | Strong demand for FreeStyle Libre; CGM sales of $2 billion in the quarter. |
| Structural heart | +11% | Share gains in TAVR and growing adoption of Triclip, plus regulatory milestones in Japan and Europe. |
| Cardiac rhythm management | +13% | Strong uptake of the Aveir leadless pacemaker, outperforming the market for 10 consecutive quarters. |
| Heart failure | +12% | Growth across ventricular assist devices and CardioMEMS. |
| Vascular | +5% | Strong vessel closure products and increasing contributions from the ESPRI below-the-knee resorbable stent. |
| Neuromodulation | +7% | Strong international performance of the Eterna rechargeable spinal cord stimulation device. |
| U.S. diagnostics | +10% | New business capture and share gains from a competitive portfolio. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| China diagnostics VBP headwind | Discussed in July as over $1 billion headwind | Q3 decline in line with Q1 and Q2; volume beginning to recover, headwind expected to lap starting Q4 | declining |
| Electrophysiology and Volt PFA catheter | — | Strong European rollout with positive physician feedback; U.S. launch planned for next year | rising |
| Cardiac rhythm management / Aveir leadless pacemaker | — | Now the fastest growing medtech line at 13%; single chamber ~50% penetrated, dual chamber sub-10% | rising |
| Diabetes CGM basal segment penetration | — | U.S. basal only ~20% penetrated, international under 5%; dual analyte sensor and potential CMS type 2 non-insulin coverage as drivers | rising |
| Tariff impact and gross margin mitigation | — | First meaningful tariff impact hit gross margin in Q3; dedicated mitigation teams targeting continued expansion toward ~57% profile | steady |
| 2026 outlook confidence | Comfortable with consensus expressed in July | Reaffirmed comfort with ~7.5% sales and 10% EPS growth consensus for 2026 | steady |
Q&A summary
Are you still comfortable with consensus sales and EPS for 2026 given the tailwinds?
Robert Ford said he is very comfortable with consensus of roughly 7.5% sales and 10% EPS growth, driven by underlying portfolio momentum, new product launches, and easing of diagnostics headwinds, while continuing to invest in nearly 200 clinical trials and key pivotal trials.
Can you give more color on U.S. versus international diabetes and the market outlook?
U.S. grew 19% (up 25% year to date); first-half strength reflected shelf restocking pull-forward, but full-year U.S. growth remains on track for over 20%. He expects another strong year in 2026 from the dual analyte sensor and continued basal penetration, with potential CMS type 2 non-insulin coverage as upside not in the base forecast.
What is the early Volt feedback in Europe and how should we think about the EP ramp into 2026?
Ford said Volt is rolling out very well with positive feedback; key advantages are focused energy delivery producing broader, deeper, more durable lesions, reduced hemolysis risk, and N-Site integration enabling conscious sedation. He expects EP to do much better in 2026, supported by a full PFA and LAA portfolio.
What are the underlying drivers of an acceleration in the diagnostics business going forward?
China dynamics are unchanged but stabilizing with volume starting to recover and the VBP comp lapping from Q4; growth outside China is accelerating with U.S. up 10%, Europe up 6-7%, and Latin America in the mid-teens, setting diagnostics up for a recovery year in 2026.
What is China doing year to date and the normalized growth outlook?
China is now under 6% of total revenue versus 9-10% a decade ago; EPD and nutrition are up double digits and cardio/neuro is improving, but diagnostics declined; excluding diagnostics, China growth is around 5-7%, and he plans for mid-single-digit growth in 2026.
How sustainable is the device business after 10-plus quarters of double-digit growth?
Ford said growth is very sustainable: high-growth areas like structural heart, EP, diabetes, and heart failure continue to accelerate, while historically flat segments such as CRM (now double-digit) and vascular (now 5-6%) are being repositioned to higher growth through heavy investment in product development and clinical trials.