Larry Biegelsen — Analyst, Wells Fargo
Good morning. Thanks for taking the question. Robert, I'd love to double click on Libre. If you could talk about the Libre trends in the U.S. and international. I think you only reported worldwide growth of 9.5%. What's the outlook for the CGM business the remainder of this year, and what's your latest thinking on the U.S. timing for the dual ketone-glucose sensor and type 2 non-insulin coverage? Just lastly, can these accelerate your CGM growth or just maintain the current rate? Thank you.
Robert Ford — Chairman and CEO, Abbott Laboratories
Sure, Larry. I loved your characterization of only 9.5% on a $2 billion quarterly business. I get where you're coming from because we've had higher growth rates. I get that. I understand that. Let me see if I can unpack this a little bit so we can kind of all get centered around this very important market of ours and how we see it. I'll get to all your questions, let me just kind of talk about this. I've said this a couple of times on other earnings calls, remain very bullish about this market, Larry. As I've said in the past, you've got 75 to 80 million people around the world that could realistically be on a CGM, you've only got 15 million so far. There's still plenty of opportunity for growth and growth acceleration.
I think it's very sustainable. There's a lot of building blocks to be able to unlock that opportunity. I'd say the number one or the one that we've seen that has the most immediate impact, pretty significant, to unlocking these opportunities is really reimbursement expansion. We have a lot of reimbursement expansion opportunities in the funnel. We're in active discussions with a dozen or so countries that are either looking to introduce or to expand reimbursement. The reason we're having these discussions to expand or introduce these categories or expand the category is because of the robust clinical data that's been developed over a decade with this technology that supports widespread adoption. We've generated data that shows that our competitor has invested and generated data that supports that.
The data is pretty resounding. It lowers A1Cs. It reduces hospitalizations. People spend more hours per day in a normal glycemic range, that has measurable outcome discussions to the healthcare system. The challenge, Larry, is actually trying to pinpoint the exact month or quarter as to when that reimbursement expansion is going to happen. Like you mentioned, the U.S., we're going to be talking about that. It's difficult to forecast that. I would actually say it's easier to forecast the conversion of an existing eligible reimbursed patient population, the penetration of technology, and how that runs, than it is to try and pinpoint when these reimbursement expansions happen. I think when you go through a period of time like that without a major reimbursement expansion, you see this kind of market growth plateau.
When I say plateau, I'm referring to like 8%, 9% growth, which like I said, I don't think is not a bad growth rate. It's just not as high as what we've seen before. To your point on do these things keep you at this growth rate or does it accelerate? It drastically accelerates it, right? Like any one of these markets that goes to reimburse an expansion or introduction of reimbursement, it dramatically accelerates the growth rate, as we've seen in the past, Larry. You've accompanied this segment. It has significant impact. The challenge is not if these countries adopt it. The question is when and how to forecast it. It's difficult for me to, with a business of this size, to try and pinpoint the exact reimbursement.
I can tell you, we are very active in active discussions with very large markets to expand or introduce reimbursement. If I look ahead at some of the key reimbursement expansions that are coming, obviously the U.S. type 2 is a huge opportunity. It's going to unlock around 10 million Medicare beneficiaries. It's going to accelerate commercial insurance coverage. This could be a multi-billion dollar opportunity, and it could happen in the fall. I just can't forecast it exactly when it's going to happen. When it does happen, it is going to definitely accelerate our sales, and we're planning and positioning ourself to be in the best possible position as it relates to sales force, distribution, et cetera, to be able to capitalize on that opportunity. The international basal coverage expansion.
Right now, with all the work that we've done, I'd say you've got France, you've got Japan, you've got Canada that have broadly adopted this. Those are three markets that are in the top 10 international markets. There are another seven markets here that are pretty significant movers, some larger than these markets, that we're having discussions. Given the clinical data, given the pressure from the societies and the patient populations, those are going to happen also. I just can't call it to the exact quarter. These reimbursement opportunities, they're going to accelerate it, and until that happens, I guess I'd say, yeah, you're at this like 8%, 9% growth rate, which on a $2 billion or approaching $10 billion business, that's not a bad business to be in.
I would say, we feel so strongly about this market and the ability for this market to accelerate and to continue to grow and the potential that exists that we're probably in the final stages here of planning for a fifth manufacturing facility. We got our facility up, our last facility, our fourth facility, we got up and running probably in the 2024 timeframe, given the trajectory that I'm seeing right now. That's a 100 million sensor facility. We're probably going to be bumping up against capacity at that facility probably in the next couple of years. We're already looking at our fifth facility, and it'll probably be a billion-dollar investment that right now we're looking at where we're going to make that investment, whether it's going to be in the U.S., internationally.
If it's going to be in the U.S., what state we're going to do. We feel good about this market, Larry. We got plenty of growth drivers here. I just go back to you've got 80 million people that can use this product, clinical data suggests that they should be using the product, healthcare systems will benefit when they do use the product. Currently we're at 15. I feel very good about our business and about our position. Regarding, you had a question about timing of CMS expansion. I think I answered that. Timing on DGK in the U.S. Listen, I'm not going to try and forecast that one either. What I will say is that the discussions are in, I would call very advanced final stages. I'm not going to try and forecast that.
Larry Biegelsen — Analyst, Wells Fargo
Understood. Thank you.
Vijay Kumar — Senior Managing Director, Evercore ISI
Hi, Robert. Good morning, and thank you for taking my question. Hey, I wanted to dive a little bit on Exact Sciences. Business did, to your point, slightly north of 13%. I think you're assuming a step up in the back half, maybe 16 plus. A lot of that is driven, maybe some of that is pricing, some of that is care gap. My question is, how much visibility do you have on these care gap programs in the back half stepping up for Exact Sciences? I think a related question was Freenome just presented their R2 data. Advanced adenoma detection rate was north of 18%. I think that's well above your competition.
When you think about the blood side of CRC screening, do you still expect Abbott to be the market leader on the blood side, even though your entry into the market will be slightly behind Guardant? Thank you.
Robert Ford — Chairman and CEO, Abbott Laboratories
Sure. Yeah, we grew 13% in the first half. Our deal model that we put together to support the acquisition for 2026 had mid-teens. I feel confident that we'll achieve that. The model called for second half being higher than first half, and the integration is going very well. We're not seeing any kind of issues or disruption. I'm just very impressed by the team there and their understanding of the market. They've done a good job here at making sure that I understand all the different detailed elements of how this market works and drives. To your point of the care gap, care gap volumes ramp in the second half. That's what's going to help drive. It's not just that, but it's a contributing factor to the acceleration in the second half.
Care gap programs really help the health systems achieve their HEDIS credits, their CMS Star ratings. That focus from the healthcare systems, for some reason, tends to happen in the second half. They're looking at their scores, they're looking at their ratings, and they're looking at ways at how they can ensure that they're achieving their targets. That seems to happen a lot in the second half. Do we have visibility? Yeah, we absolutely have visibility. The team is an incredible team there in terms of their market access team. They've got work to do, there's no doubt, but there's a lot of visibility to those programs, and there's a lot of conversations that are happening with the health systems. They're seeing a need to continue to push on earlier detection of Cologuard.
I feel good about the ramp-up of the care gap and the visibility to that. You mentioned price being an element there. As we transition from Cologuard to Cologuard Plus, that's a little bit of a tailwind also. I think there are a lot of key growth drivers here in the medium long term, Vijay, and they're all looking very good. If you look at the growth from Cologuard users, they're exceeding our expectations. There's a certain forecast of how many new users we'll be able to bring in, and the team is actually exceeding that target. The number of repeat users in Cologuard, we talked about the rescreen. That funnel is expanding, and it is extremely reliable in terms of since we have the names, people want to stay up to date with their screening.
That rescreen funnel is expanding, and that's a great opportunity for us. Obviously, Cancerguard, we're investing in that launch. We're going to be reviewing some of our next generation MRD data will be coming out also. There's international expansion. I've been involved in some of the discussions around that, and we're going to be making some pretty interesting progress there with certain governments. Then to your point, the ability to add a blood test to the portfolio is going to be, I think, extremely attractive for us. As you know, blood tests are obviously a little bit more convenient. I think Cologuard is pretty convenient, but I would say blood is a little bit more convenient than that.
It has a problem, which is it doesn't have the same sensitivity as it relates to detection of precancerous polyps and earlier stage detection, right? When you think about screening, that's super important. So I think we'll be the only company-- Say, will you be a leader in blood? I don't actually see it like that, Vijay. We want to continue to be the leader as it relates to screening, and now you're going to have a company that's going to have the opportunity to not only offer a best-in-class stool test, but now we'll also have a best-in-class blood test. I think there might be opportunities, I think as you saw some of the guidelines come out from the American Cancer Society, there is a preference and a drive towards Cologuard.
If you still have a lot of patients that aren't up to date with their screening or haven't done screening, whether it's colonoscopy or Cologuard, that'll be an opportunity for us. That'll be a new market. I think the way I view it is, okay, we'll bring these patients, these consumers, into our screening funnel, and then we'll be able to educate them on the benefits of Cologuard. I think we'll be in a great position as it relates to being the only company to have both stool and blood and be able to support the health systems with that. Even with that precancerous detection being lower than Cologuard, doing a blood test, if you're not doing anything, is probably a good first step, but then you want to actually start to do it with a Cologuard test.
Again, I see a lot of great opportunity in our cancer diagnostic business. The integration is going very well. I continue to be very impressed with this team and their understanding of the market that they've built and their plans to continue to drive it.
Vijay Kumar — Senior Managing Director, Evercore ISI
That's helpful, Robert. Thank you.
Matt Taylor — Managing Director, Jefferies
Hi, good morning. Thanks for taking the question. I thought it'd be worth spending a minute on EP, given you have this nice series of launches here. You seem to be gaining traction with Volt already. Could you comment on market dynamics and your aspirations in the market? Maybe just talk about how you think the AF market will continue to grow. I know you're committing to growing above market in the second half. Could you talk about how that could continue into next year and the kind of share aspirations that you have?
Robert Ford — Chairman and CEO, Abbott Laboratories
Sure. I'm not going to give specific targets on share. I think where I'll leave it right now is, yeah, we do expect to grow faster than the market. I think we're entering this phase here where we'll start to outperform market and capture share. I think we saw early signs of that in Q2, Matt. Sales increased every month in the quarter and very good progress there. I think what we'll really start to see that happen in the second half as we transition from a limited market release to full market release of Volt in the U.S. and then continue to roll out TactiFlex Duo internationally. We continue to get very good feedback from physicians and doctors around the world that are using the product.
I'd say Volt, for me, what I hear a lot about Volt is just the continued integration to the mapping system and not having to use a mapping system or a mapping infrastructure that's a little bit subpar versus where the market-leading mapping systems are. Now you don't really have to take that step back a little bit. You've got a PFA catheter that's got very good mapping integration. Opportunity, especially here in the U.S., I keep hearing that for ASC and ASC adoption, given the open footprint of the mapping system and the ability to do these cases with general sedation, just with sedation versus general anesthesia.
The ability here, given the contact, we got to prove this out a little bit, but given the contact integration with mapping and the visualization of that ability to deliver better outcomes by producing more doable lesions. Volt is getting great feedback, and we feel good now that we can move to full market release. TactiFlex Duo, this is coming on the chassis of a very well-liked and understood catheter in the TactiFlex chassis. Seeing nice share capture trends in Europe. Our EP business was up 20% in Europe in the second quarter, that's good. I have high expectations for both these catheters, as I've been pretty clear over these last couple of years, our growth strategy is not going to be built off one product or one catheter that we've got to kind of monitor closely and see.
Yes, these catheters will drive a lot of growth, but we believe that our right growth strategy is to really focus on selling the entire procedure. That's why we've been focusing on not just on these PFA catheters, but also on the mapping systems, all the ancillary, the diagnostics, the introducers, the ICE catheter. I mean, all of that matters, and that's what our focus is here is to really position ourselves as a leading company in this space. We've got a nice pipeline of PFA catheters still in the works. Between now and 2029, we'll have iterations and new versions and new ideas come out. We're also equally investing in mapping and ensuring that our mapping superiority is maintained as obviously competitors are launching their own mapping systems.
We'll continue to invest in that also, and our ability to stay ahead I think is very strong. I think from a forecast perspective, I expect global EP growth to accelerate. It's in the teens right now. It'll accelerate in the second half for sure and outperforming the market. I expect that momentum that we're building this year to carry through to next year. I think we'll get an additional boost into this EP portfolio with our new LAA device. I think the feedback there has been extremely positive. We filed with the FDA. I think here I'll probably feel a bit more comfortable saying, I can see a potential to be able to get this approved by year-end. With that, we'll have strong momentum going into next year with both rollout of TactiFlex Duo in the U.S.
Continued acceleration of Volt in the U.S., launching our next generation LAA device also. I see that momentum continuing into next year.
Matt Taylor — Managing Director, Jefferies
Great. Thanks so much.
Robert Ford — Chairman and CEO, Abbott Laboratories
Yep.
Travis Steed — Managing Director, BofA Securities
Hey, Robert. Thanks for taking the question. I guess as we move into the second half of this year, investors are going to start looking more into next year. Curious how you think about the Abbott portfolio in the next year. If this is a kind of a year that sets up for better growth. You've got easier nutrition comps, expanding coverage in Libre. You talked about EP accelerating in the next year, Amulet 360 launching at the beginning of the year. Curious at a high level how you kind of think about the Abbott portfolio in 2027 in growth.
Robert Ford — Chairman and CEO, Abbott Laboratories
Sure. It's a little early to give exact guidance in 2027. Listen, we have a target always of targeting high single digit growth on the top, double digit on the bottom. I previously referenced 7% as a very kind of sustainable growth rate. I believe 7% is still the right target, despite there being a much larger base today versus where we were several years ago. I looked at this, there's only like five healthcare companies with sales over $30 billion that are growing at least 7%. I think we have a differentiated portfolio here, a very resilient portfolio. I think, as I said, the strategy here of what we've been doing over the last couple quarters to get us back into that 7% top line growth rate.
I think it's really driven, Travis, by looking at the portfolio and then the execution. If I look at the four segments, again, I'm not providing 2027 guidance, but when I look at each one of them and their ranges, nutrition has been a 2%-4% grower, and I think that's probably, as we think about it going forward, that's probably the right range to be thinking about. Our diagnostics portfolio with the addition of Exact Sciences, the VBP impact in China subsiding a little bit is now a 7%-8% kind of range that we think about. Our EPD business has reliably done this for like five years, like 7%-9%. MedTech, we view as kind of an 8%-10% grower. The low end of that range is around 6.5%, the high end is around 8.5%.
I think 7% is a pretty sustainable kind of growth rate going forward. That's what we target, high single digit, double digit EPS growth. I think we're well positioned, executing what we're executing in the second half and the portfolio we have, I think the sustainability of that 7%. Obviously all the pipeline, we've got programs that we're going to start in Q4, at least from a trial perspective, that are going to start to deliver contributions in 2029 and 2030. Yeah, we're thinking about 2027 for sure, but we're also thinking 2028, 2029 and 2030, and what are the things that we need to be able to kind of sustain that top line growth rate.
Travis Steed — Managing Director, BofA Securities
That's great. Thanks a lot.
Robert Ford — Chairman and CEO, Abbott Laboratories
Yep.
Josh Jennings — Managing Director, TD Cowen
Hi. Good morning. Thanks for the question. I wanted to just ask on the structural heart unit. I think your team's been pretty clear that it may take some time for the U.S. franchise to regain its foundation. Any help just thinking through some of the strategic initiatives, either on the commercial infrastructure side, pricing in front of some of the innovation that you've talked about, Robert, on with the balloon expandable TAVR and the mitral replacement valve that's in development. Just help us think through when can the structural heart franchise start to see improved growth and trends? Is that 2027? To your answer to one of your last questions on the 2027 outlook, maybe soft comps for 2027, can structural heart get back in the groove next year? Thanks.
Robert Ford — Chairman and CEO, Abbott Laboratories
Yeah. Listen, I expect structural heart by the end of this year to be in that kind of mid to high single-digit growth rate back to where we were before. I've been pretty clear about where we're falling short. It's not a price issue, it's not a product issue. It's really kind of how we think about competing in the mitral space, specifically in the U.S. We've seen competitive intensity increase there here in the U.S. I mentioned that during our last earnings call. I said it was going to take us a couple quarters. Q2 is the first one. I think by the end of the year, I think you'll start to see that start to change. We've made changes, personnel changes. We've also looked at how we're approaching the market.
It's not a pricing thing. It's just more about how we have one of the most comprehensive and broadest portfolios in structural heart, and I think that our team has trying to figure out a better way of how to position that full portfolio. We're showing good growth in Tricuspid, we're showing good growth in TAVR here in the U.S. We've got to do a better job in mitral. The team knows that. They're motivated. I've met with them. They're determined to respond to the challenge. U.S. has got some work to do. We've had a lot of work this quarter. I expect there'd be a lot of work in Q3. I think you'll start to see that change in Q4. I will put a plug in for the international team.
I think the international team has been able to grow double-digits in the first half. TAVR was up 30% in the first half. MitraClip and TriClip, our structural interventions portfolio, all of that is growing really strong. That international team has done a really good job. There are things that the U.S. organization can learn from some of the strategies that have been developed there. Work to be done there. I still think that this is probably one of our key growth drivers. If you think about the pipeline that we're assembling, you've got guideline changes, you've got product launches. We just launched TriClip in Japan. Label expansions, pipeline, I think Cephea going into trial. I continue to just only hear incredibly positive things about this mitral valve replacement.
I think we have the potential to live up to the promise that we thought maybe a decade ago in 2015, when everybody was making investments in MitraClip, believing that it could be just as big as TAVR. I actually think now with this product, we have the potential to actually make that a reality. We've got a lot of momentum here. I think in the short term, we're dealing with some improved commercial execution that we've got to do, and I've got trust and confidence in the team that they know what they've got to do, and they'll deliver.
Joanne Wuensch — Managing Director, Citi
Good morning, thank you so much for taking the question. The broad, not guidance, commentary on nutrition for 2%-4% is a nice acceleration off of the last couple of quarters. Sounds like you're getting some good momentum out of the WIC contracts. Is there an update that you can give us, sort of a state of the union of what you're seeing in terms of launching some new products as well as market positioning? Thank you so much.
Robert Ford — Chairman and CEO, Abbott Laboratories
Yeah, absolutely. I think I mentioned on our Q1 call that we were tracking according to plan. That was back in April. I'm reiterating that same message here. We remain very much on track. There's a lot of proof points here, Joanne, in terms of being able to feel confident about not only the acceleration in the second half, but establishing this kind of 2%-4% range here for this business. It's about $125 million of sequential growth, as I said in my preferred comments. What I liked about it as we were looking at it every single month, it was getting better. A couple of highlights, I guess, on the pediatric side. As I said, the international portion is now back to positive growth.
Our sales in international pediatrics has been the highest in the last two years. I think the teams are doing a good job there. International pediatric, we referenced the WIC contracts. Those are now fully baked in, and we are back to market leadership after six months of very hard work out in the field. The team has done a good job there. On the adult side, which is probably where the pricing strategy had more of an impact, or at least we expected it to have more of an impact, I think the volumes are responding very positively to that. Retail consumption of Ensure in the U.S. is up double digits versus our exit in 2025.
Now, of course, that's a pretty low point here, but if you look at it from a year-over-year perspective, like I said, it's one of the highest growth rates we've had in over a year and a half from a consumption perspective. You've got the volume consumption now chewing through that price that we took in Q4. I expect both these businesses now, adult and pediatric, to go back to a positive territory as we've worked our way through all the inventory and the new pricing. I think Q3 will probably be the most, I'd say, cleanest quarter. Obviously, Q4, you have a pretty big comp issue, right? Which is why if you look at the exit rate, we're going to be in that 2.5%-3% if you take it on a two-year CAGR.
That's why I'm anchoring this kind of 2%-4% trajectory. The new product launches are doing very well. There's obviously a lot of focus on protein, especially with GLP users. We've been trying to offer something that's a little different, not just the protein, but also protein with less sugar. A lot of the products that are out there taste very well, but they taste very well because there's a lot of sugar. Some of the companies that are marketing these products they're notorious for knowing how to work with sugar. I would say we've got good momentum from the marketing messaging around high protein and low sugar. Then we've got a bunch of upcoming product launches. I think probably the ones I'm more excited about is we've got a collagen protein shake that's coming out.
We'll be offering a new adult product that will have not only protein and HMB, but we're going to be adding creatine to it. That is going to be a very strong focus. Then we'll be also launching a new infant formula in the second half using whole milk. I think that the execution here, if it's state of the union here, Joanne, is, listen, I think the team has responded well to the challenge. There are obviously things that we can continue to do better. We know what they are. We're going to continue to focus on them. I think right now, the trajectory and the plan that we had, we're a little bit ahead of that. I'm not going to change that guidance right now based on two quarters.
You could see if we can continue to maintain this momentum and continue to surpass what our expectations were, there might be an opportunity here to kind of rethink about the guidance of this business. Right now, I think we're in the right spot, and this is just about execution and developing proof points that we're moving forward and that the strategies that we put in place are reigniting the growth in this business.
Joanne Wuensch — Managing Director, Citi
Wonderful. Thank you.
Mike Comilla — VP of Investor Relations, Abbott Laboratories
Crystal, we'll take one more question, please.
Marie Thibault — Managing Director, BTIG
Hi, good morning. Thanks so much for taking my question. I wanted to circle back here on Amulet and the left atrial appendage closure market. You certainly got a really exciting product catalyst ahead with Amulet 360. I just want to understand what Abbott is seeing out there in the market today. Certainly, your competitor has talked about some challenges they're facing. I just want to understand sort of the appetite for left atrial appendage closure today. Thanks for taking the question.
Robert Ford — Chairman and CEO, Abbott Laboratories
Sure, Marie. I mean, this is ultimately a very attractive market, which is why we've continued to make the investment. It's a $2 billion market. The competitor has a 90% market share. To be honest with you, given the market share differences there, I will defer to our competitor for more specific market growth projections here, Marie. My focus and the team's focus here is on market share capture. I think this represents a big opportunity for us. Data and feedback from Amulet 360 has been fantastic, actually. You now have what was known as a superior product to be able to actually seal the LAA. Now with 360, have a much more seamless implant experience for the physician. I think that this is going to bode well for our EP business.
As you know, the LAA is increasingly becoming an EP procedure. If you think about where a lot of the growth is coming from, it's coming from the concomitant segment. I think we're well positioned there to be able to kind of drive market share. It's not by accident that we moved this portfolio from structural heart into our EP business because we believe that the winning company in this space not only have great PFA catheters, great mapping systems, great field mappers, but you also got to have a great LAA device here to be able to do that. I think we're way ahead from our competitors from that perspective. Listen, I think this is an attractive market. About its future growth projections, I mean, we could probably lay out the opportunities that exist there.
My more immediate opportunity for Abbott is to be able to kind of gain market share. We're going to have an opportunity to essentially relaunch a product. You don't get a lot of opportunities like that. We'll leverage some of the lessons we've learned, and I'm pretty confident here that we'll be able to have this be a nice growth driver for us in 2027 and beyond. I actually think that this idea of concomitant procedures with LAA aren't just restricted to the electrophysiology segment. I think there's going to be opportunities in the interventional cardiology side also to think about. The way we think about it is, yeah, there's an opportunity over here we're going to focus on market share.
I think there's also market development work to happen both in the EP side, but also in the interventional side too. A lot of work going on there, but I'd say very excited about bringing this next generation product to market. Feel good about the market and the product we have and the team that we got. With that, I'll just close on the comments here since we're up on time. I'd say good progress on addressing what are these short-term and kind of temporary challenges that we've highlighted in January. Very good progress there. I think we're entering the second half with a lot of momentum, several of our key growth drivers. We know what they are, we know what we need to do.
That's what we're focusing on every single week and month on execution to the targets that we've set for ourselves. My confidence remains high in that second half acceleration. The efforts and focus that we've put on gross margin and our gross margin expansion strategy, both from a mix and cost mitigation, they're having an impact, and that's allowed us to raise our full-year EPS guidance. We've raised it more by the beat that we had in the second half because we believe that the sustainability of this expansion is there. Our cash generation and cash flow management are likely going to put us ahead of our January forecast for the year, and that's going to just allow greater flexibility here for capital return.
I'm extremely excited about the pipeline that we built, both for the products that we're launching, the future product launches that we're going to have over the next 24 months. I think it gives us confidence that we've got a lot of momentum that we're building is sustainable as we move into 2027 and 2028. With that, I thank you for joining us today.
Mike Comilla — VP of Investor Relations, Abbott Laboratories
Thank you all for your questions. This now concludes Abbott's conference call. A webcast replay of this call will be available after 11:00 A.M. Central Time today on our website, abbott.com. Thank you for joining us today.