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ABBOTT LABORATORIES

ABT
🏢 Pharmaceutical Preparations

Business Operations Summary

Abbott Laboratories operates in the global healthcare industry, discovering, developing, manufacturing, and selling a broad and diversified line of healthcare products. The company's business is subject to comprehensive government regulation by the U.S. Food and Drug Administration and similar international agencies, and it faces intense competition from other healthcare and pharmaceutical companies. Cost containment efforts by governments and private organizations, as well as changes in the healthcare regulatory environment, are key structural forces shaping competition. Abbott sits within this landscape as a diversified healthcare company with four reportable segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.

Abbott's products face intense competition from competitors' products and technological advances, with competitors' products potentially being safer, more effective, or having lower prices. The company's competitive advantages include patent and trademark protection, technological and performance features, and inclusion of its products under contracts. In the Established Pharmaceutical Products segment, competition is generally from other healthcare and pharmaceutical companies, including the substitution of generic drugs. In the Diagnostic Products segment, competition is based on technological innovation, price, and convenience of use, with some products subject to rapid obsolescence. In the Nutritional Products segment, competition is from other diversified consumer and healthcare manufacturers, with a significant aspect being the search for ingredient innovations. In the Medical Devices segment, competition is based on technological innovation, price, and product performance, with some products subject to rapid obsolescence.

Abbott generates revenue primarily from the sale of a broad line of healthcare products under short-term receivable arrangements. The company's products are sold directly to retailers, wholesalers, distributors, hospitals, healthcare facilities, laboratories, physicians' offices, and government agencies worldwide. Recurring revenue streams are significant, particularly in the Diagnostic Products segment through the sale of reagents and consumables, and in the Medical Devices segment through continuous glucose monitoring sensors and remote monitoring services. Transactional income comes from the sale of capital equipment and other one-time product sales. The company's four reportable segments are Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.

The Established Pharmaceutical Products segment includes a broad line of branded generic pharmaceuticals marketed and sold outside the United States in emerging markets, with principal products in gastroenterology (including Creon for pancreatic exocrine insufficiency), women's health (including Duphaston and Femoston), cardiovascular and metabolic (including Lipanthyl, TriCor, and Synthroid), pain and central nervous system (including Serc and Brufen), respiratory drugs and vaccines (including Klacid and Influvac), and biologic products including biosimilars. The Diagnostic Products segment includes core laboratory and transfusion medicine systems (including the Alinity family of instruments), molecular diagnostics PCR systems (including Alinity m and m2000), point-of-care systems (including i-STAT and i-STAT Alinity), rapid diagnostics lateral flow testing products (including BinaxNOW and Panbio), and informatics and automation solutions. The Nutritional Products segment includes pediatric nutritionals (including Similac infant formula and PediaSure) and adult nutritionals (including Ensure and Glucerna). The Medical Devices segment includes rhythm management products (including Aveir leadless pacemakers and Gallant ICDs), electrophysiology products (including the Volt Pulsed Field Ablation System and TactiFlex ablation catheters), heart failure products (including HeartMate LVAD and CardioMEMS HF System), vascular products (including XIENCE drug-eluting stents and Perclose ProGlide vessel closure devices), structural heart products (including MitraClip and TriClip), continuous glucose monitoring systems under the FreeStyle Libre brand, and neuromodulation products (including Proclaim Plus and Eterna IPGs).

In the Medical Devices segment, sales of Abbott's continuous glucose monitoring (CGM) systems totaled $7.6 billion in 2025 and $6.4 billion in 2024. In the Diagnostic Products segment, COVID-19 testing-related sales totaled $297 million in 2025, $747 million in 2024, and $1.6 billion in 2023. In the Nutritional Products segment, U.S. Pediatric Nutritionals sales were $2,158 million in 2025 and $2,208 million in 2024, while International Adult Nutritionals sales were $3,029 million in 2025 and $2,909 million in 2024. In the Established Pharmaceutical Products segment, Key Emerging Markets sales were $4,167 million in 2025 and $3,858 million in 2024. In the Medical Devices segment, Diabetes Care sales were $7,998 million in 2025 and $6,805 million in 2024, and Rhythm Management sales were $2,649 million in 2025 and $2,390 million in 2024.

On November 19, 2025, Abbott entered into a definitive agreement to acquire Exact Sciences Corporation, with Abbott to pay $105 per common share in cash, representing a total equity value of approximately $21 billion and an estimated enterprise value of $23 billion . Abbott obtained a commitment for a 364-day senior unsecured bridge term loan facility for an amount not to exceed $20.0 billion in conjunction with this acquisition. In 2025, Abbott repurchased 4.8 million of its common shares for $604 million , and as of December 31, 2025, $6.7 billion remains available for repurchase under the 2024 repurchase program. Abbott declared dividends of $2.40 per share in 2025 and $2.24 per share in 2024, an increase of 7.1 percent . In December 2025, Abbott increased the quarterly dividend by 6.8 percent to $0.63 per share. Abbott recorded restructuring charges of $274 million in 2025 related to plans to streamline operations. On September 15, 2025, Abbott repaid the $500 million outstanding principal amount of its 3.875% Notes upon maturity, and on March 17, 2025, Abbott repaid the $1.0 billion outstanding principal amount of its 2.95% Notes upon maturity.

Total net sales for 2025 were $44,328 million , compared to $41,950 million in 2024 and $40,109 million in 2023. Net earnings were $6,524 million in 2025, $13,402 million in 2024, and $5,723 million in 2023. Diluted earnings per common share were $3.72 in 2025, $7.64 in 2024, and $3.26 in 2023. Operating earnings were $8,053 million in 2025, $6,825 million in 2024, and $6,478 million in 2023. The operating margin profile increased to 18.2 percent in 2025 from 16.3 percent in 2024 and 16.2 percent in 2023. Net cash from operating activities amounted to $9.6 billion in 2025, $8.6 billion in 2024, and $7.3 billion in 2023.

Business Outlook & Future Growth Drivers

The filing states that in 2026, Abbott will continue to invest in product development areas that provide the opportunity for strong sustainable growth over the next several years, and that research and development spending is targeted at approximately 7 percent of total Abbott sales in 2026.

In the Medical Devices segment, Abbott will focus on growing recently launched products and expanding its market position across its various businesses. Key product approvals in 2025 included U.S. FDA approval and CE Mark for the Volt Pulsed Field Ablation System to treat patients with atrial fibrillation, FDA approval of the Tendyne transcatheter mitral valve replacement system, regulatory approval in Japan for TriClip, CE Mark for TactiFlex Duo Ablation Catheter, and CE Mark for an expanded indication for the Navitor TAVI system. In the Diabetes Care business, Abbott is developing enhancements, additional indications, and tools for continuous monitoring products to help with the management of diabetes, as well as to expand use beyond diabetes. In the Established Pharmaceutical Products segment, Abbott will continue to focus on growing the depth and breadth of its portfolio in emerging markets, including expanding its biosimilars portfolio, and plans to expand its product portfolio in key therapeutic areas and biosimilars with the aim of addressing the health needs of more people in emerging markets.

In the Diagnostic Products segment, Abbott will focus on driving sales growth from its Alinity suite of diagnostic instruments, including expanded menu offerings and GLP track integration, as well as its portfolio of rapid diagnostic testing systems, and growing digital health solutions. The pending acquisition of Exact Sciences Corporation is expected to enable Abbott to enter the cancer diagnostics market. In the Nutritional Products segment, Abbott will focus on introducing new products to adapt to evolving consumer preferences and driving growth globally, with research and development spend focused on platforms spanning pediatric and adult nutrition areas including gastrointestinal/immunity health, brain health, mobility and metabolism, and user experience platforms.

The operating margin profile increased to 18.2 percent in 2025 from 16.3 percent in 2024, reflecting the favorable impact of margin improvement initiatives, partially offset by foreign exchange and inflation. Gross profit margins were 52.6 percent of net sales in 2025, 50.9 percent of net sales in 2024, and 50.3 percent of net sales in 2023. The increase in 2025 reflects the favorable impact of margin improvement initiatives, partially offset by higher costs, including tariffs, and the unfavorable impact of foreign exchange. In 2025, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostics, Nutritionals, Established Pharmaceuticals, and Medical Devices businesses, recording employee related severance and other charges of $274 million .

Abbott expects to contribute approximately $85 million to its pension plans in 2026. Abbott expects annual cash flow from operating activities to continue to exceed Abbott's capital expenditures and cash dividends. Capital expenditures of $2.2 billion in 2025 were principally for upgrading and expanding manufacturing and research and development facilities and equipment in various segments, investments in information technology, and laboratory instruments placed with customers.

Research and development expenses were $2.9 billion in 2025, $2.8 billion in 2024, and $2.7 billion in 2023. Abbott plans to manage its portfolio of projects to achieve research and development spending that will be competitive in each of the businesses in which it participates, and such spending is targeted at approximately 7 percent of total Abbott sales in 2026. Capital expenditures were $2.2 billion in 2025, 2024, and 2023. As of December 31, 2025, $6.7 billion remains available for repurchase under the 2024 repurchase program. Abbott declared dividends of $2.40 per share in 2025 compared to $2.24 per share in 2024, an increase of 7.1 percent . In December 2025, Abbott increased the company's quarterly dividend by 6.8 percent to $0.63 per share from $0.59 per share.

Sales in international markets comprise 61 percent of consolidated net sales, and Abbott's business is subject to geopolitical and macroeconomic risks including the enactment of trade protection measures such as tariffs, import or export licensing requirements, and changes to international trade agreements. The U.S. government has imposed tariffs on imports into the U.S., and it may impose additional tariffs in the future, with some countries potentially retaliating with trade protection measures including reciprocal tariffs. Fluctuation in foreign currency exchange rates has adversely affected and may continue to adversely affect Abbott's financial statements, with sales outside of the U.S. in 2025 making up approximately 61 percent of Abbott's net sales. The ongoing Russia-Ukraine conflict has resulted in sanctions, economic and currency volatility, higher inflation, heightened cybersecurity risks, and operational and supply chain disruptions.

Abbott's operations in Russia and Ukraine represent approximately 2 percent of Abbott's total revenues and net assets. Abbott's sales growth in 2025 was impacted by the decline in COVID-19 testing-related sales in the Diagnostics segment, with COVID-19 testing-related sales totaling $297 million in 2025, $747 million in 2024, and $1.6 billion in 2023. In the Diagnostics segment, sales were also affected by challenging market conditions in China, including the impact of volume-based procurement programs. In the Nutritional Products segment, U.S. Pediatric Nutritionals sales decreased 2.3 percent in 2025, primarily reflecting lower infant formula sales.

Major Risk Factors & Challenges

Abbott faces material risks from its pending acquisition of Exact Sciences, as it plans to fund the transaction with approximately $20 billion of borrowings, which will increase consolidated indebtedness from approximately $12.9 billion as of December 31, 2025, and could reduce business flexibility and potentially cause a deterioration of credit ratings. The company is subject to significant legal and regulatory risks, including a criminal investigation by the United States Department of Justice related to Abbott's manufacturing of powdered infant formula, and numerous lawsuits alleging that its preterm infant formula products cause necrotizing enterocolitis, with a jury in a Missouri state court awarding a plaintiff $495 million in damages in one case. Abbott's business is also exposed to geopolitical and macroeconomic risks, as sales outside of the U.S. make up approximately 61 percent of net sales, and the company faces potential adverse effects from tariffs, trade protection measures, and foreign currency exchange rate fluctuations. Additionally, Abbott's research and development efforts to develop commercially successful products may not succeed, and the company must make ongoing substantial expenditures without assurance of commercial success, with research and development expenses of $2.9 billion in 2025.

Management Priorities & Sentiments

Management's message emphasizes that Abbott's sales growth in 2025 was primarily attributable to the performance of the Medical Devices and Established Pharmaceutical Products segments, with results reflecting continued progress across related research and development programs, including the contribution of new and recently introduced products and indication expansions. The filing states that in 2026, Abbott will continue to invest in product development areas that provide the opportunity for strong sustainable growth over the next several years. The strategic priorities emphasized for the period ahead include: in the diagnostics businesses, focusing on driving sales growth from its Alinity suite of diagnostic instruments, including expanded menu offerings and GLP track integration, as well as its portfolio of rapid diagnostic testing systems, and growing digital health solutions; in the medical devices businesses, focusing on growing recently launched products and expanding its market position across its various businesses; in the nutrition businesses, focusing on introducing new products to adapt to evolving consumer preferences and driving growth globally; and in the established pharmaceuticals businesses, continuing to focus on growing the depth and breadth of its portfolio in emerging markets, including expanding its biosimilars portfolio. Management also notes that research and development spending is targeted at approximately 7 percent of total Abbott sales in 2026.

References

  1. [1] Item 7, MD&A — Results of Operations
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  16. [16] Item 7, MD&A — Business Acquisitions
  17. [17] Item 7, MD&A — Business Acquisitions
  18. [18] Item 7, MD&A — Business Acquisitions
  19. [19] Item 7, MD&A — Debt and Capital
  20. [20] Item 7, MD&A — Debt and Capital
  21. [21] Item 7, MD&A — Debt and Capital
  22. [22] Item 7, MD&A — Debt and Capital
  23. [23] Item 7, MD&A — Financial Condition
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  25. [25] Item 7, MD&A — Financial Condition
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  28. [28] Item 7, MD&A — Restructurings
  29. [29] Item 7, MD&A — Debt and Capital
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  43. [43] Item 7, MD&A — Results of Operations
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  46. [46] Item 8, Consolidated Statement of Cash Flows
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  49. [49] Item 7, MD&A — Research and Development Programs
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  52. [52] Item 7, MD&A — Operating Earnings
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  56. [56] Item 7, MD&A — Financial Condition
  57. [57] Item 7, MD&A — Capital Expenditures
  58. [58] Item 7, MD&A — Operating Earnings
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  61. [61] Item 7, MD&A — Research and Development Programs
  62. [62] Item 7, MD&A — Capital Expenditures
  63. [63] Item 7, MD&A — Debt and Capital
  64. [64] Item 7, MD&A — Financial Condition
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  78. [78] Item 1A, Risk Factors
  79. [79] Item 3, Legal Proceedings
  80. [80] Item 1A, Risk Factors
  81. [81] Item 7, MD&A — Operating Earnings
  82. [82] Item 7, MD&A — Research and Development Programs
  83. [83] Item 8, Consolidated Statement of Earnings
  84. [84] Item 8, Consolidated Statement of Earnings
  85. [85] Item 8, Consolidated Statement of Earnings
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  94. [94] Item 8, Consolidated Statement of Earnings
  95. [95] Item 7, MD&A — Results of Operations
  96. [96] Item 7, MD&A — Results of Operations
  97. [97] Item 7, MD&A — Results of Operations
  98. [98] Item 8, Consolidated Statement of Cash Flows
  99. [99] Item 8, Consolidated Statement of Cash Flows
  100. [100] Item 8, Consolidated Statement of Cash Flows
  101. [101] Item 8, Consolidated Balance Sheet
  102. [102] Item 8, Consolidated Balance Sheet
  103. [103] Item 8, Consolidated Balance Sheet
  104. [104] Item 8, Consolidated Balance Sheet
  105. [105] Item 7, MD&A — Taxes on Earnings
  106. [106] Item 7, MD&A — Results of Operations
  107. [107] Item 7, MD&A — Results of Operations
  108. [108] Item 7, MD&A — Results of Operations
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  113. [113] Item 8, Note 3 — Revenue
  114. [114] Item 8, Note 3 — Revenue
  115. [115] Item 7, MD&A — Results of Operations
  116. [116] Item 8, Note 3 — Revenue
  117. [117] Item 8, Note 3 — Revenue

Report on Jun 8, 2026