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Abbott (ABT) Q2 2025 Earnings Call Transcript

July 17, 2025
11:03 AM
13 min read
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Interestingly, Image source: The Motley Fool. DATEThursday, July 17, 2025 at 9 a, given the current landscape. However, ETCALL PARTICIPANTSChairman and Chief Executive Officer — Robert FordExecutive Vice President of...

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July 17, 2025

11:03 AM

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Interestingly, Image source: The Motley Fool

DATEThursday, July 17, 2025 at 9 a, given the current landscape

However, ETCALL PARTICIPANTSChairman and Chief Executive Officer — Robert FordExecutive Vice President of Finance and Chief Financial Officer — Phil BoudreauVice President of Investor Relations — Mike ComillaNeed a quote from one of our analysts, in today's financial world. [ tected]RISKSDiagnostics sales face a headwind of apximately $700 million for full-year 2025, driven by diminished COVID testing demand and volume-based curement grams in China, representing a jected 750 basis point negative impact on organic segment sales growth for the year

Moreover, Tariffs are expected to negatively impact results by just under $200 million in 2025, as disclosed by management

Management identified a negative year-over-year impact from FX on EPS, quantified as roughly a nickel for Q2 2025 (this bears monitoring)

Nevertheless, TAKEAWAYSTotal Company Sales Growth (Organic, Excluding COVID Testing): 7. 5% organic sales growth excluding COVID testing sales in the second quarter 8% organic sales growth excluding COVID testing sales in the first half of the year

Adjusted EPS: $1, given current economic conditions. 26 adjusted earnings per in Q2 2025, up 11% year over year and 16% sequentially from the first quarter, with reference to exceeding the consensus estimate (remarkable data)

Margin Expansion: 100 basis point increase in both adjusted gross and operating margins in the second quarter compared to the prior year, in this volatile climate

On the other hand, Nutrition Segment Sales Growth: 3

Moreover, 5% overall organic sales growth in nutrition for Q2 2025 (non-GAAP), 6. 5% growth in adult nutrition ducts globally in the second quarter

On the other hand, Diagnostics Segment Sales: Diagnostics sales declined 1

Additionally, 5% on an organic basis in Q2 2025, mainly due to lower COVID testing volumes and China volume-based curement impacts, with Core Lab Diagnostics (excluding China) organic sales growth of 8% in Q2 2025

Established Pharmaceuticals (EPD) Segment Sales: Nearly 8% organic sales growth for EPD in Q2 2025, with the key 15 surpassing $1 billion in quarterly sales for the first time in Q2 2025

In contrast, Medical Devices Segment Sales: 12% organic sales growth in medical devices in Q2 2025, supported by double-digit organic sales growth in diabetes care, heart failure, structural heart, electrophysiology, and cardiac rhythm management ducts

In contrast, Diabetes Care (Libre CGM): $1. 9 billion in sales of continuous glucose monitors in Q2 2025, up 19 (noteworthy indeed). 5% in Q2 2025 (organic, non-GAAP); U

Libre segment grew nearly 26% in the second quarter, while international basal segment organic sales growth continues to be supported by expanded reimbursement

Furthermore, Heart Failure Device Sales: Grew 14% in Q2 2025, with balanced contributions across both chronic and acute portfolios and CardioMEMS device (this bears monitoring)

However, Adjusted Gross Margin: Adjusted gross margin was 57% of sales in Q2 2025, representing a 100 basis point increase in the second quarter compared to the prior year

Adjusted R&D and SG&A: 6. 7% of sales, respectively, in Q2 2025 (adjusted)

Conversely, Adjusted Operating Margin: Adjusted operating margin was 22

Conversely, 9% of sales in Q2 2025, up 100 basis points year over year (adjusted)

FX Impact: 0, given current economic conditions. 5% favorable impact on sales in Q2 2025, with an expected relatively neutral full-year impact on reported sales for 2025, but a jected 2% favorable impact on reported sales in Q3 2025

Q3 EPS Guidance: Adjusted EPS forecast of $1, in light of current trends. 32 for Q3 2025, as explicitly vided in guidance (something worth watching)

Biosimilars Pipeline: enabling launches to begin in emerging in 2026

Next-Generation and New duct Launches: FDA apval for Tendon mitral replacement valve received in May, with a pivotal trial for the transfemoral mitral valve duct planned for next year (as stated on the Q2 2025 earnings call)

Moreover, CRM (Avera Pacemaker) Performance: Cardiac rhythm management grew 10% this quarter, in light of current trends

M&A Strategy: CEO states "strong organic pipeline" is enabling greater selectivity in pursuit of strategic M&A within Diagnostics and Medical Devices

SUMMARYAbbott Laboratories (ABT -8. 28%) presented a quarter marked by distinct segment divergence, with medical devices sustaining double-digit organic sales growth and diagnostics constrained by COVID test declines and policy headwinds in China during Q2 2025 (non-GAAP)

The company dered high single-digit organic sales growth and margin expansion (non-GAAP) in the first half of 2025, given current economic conditions

New duct milestones -- including regulatory apvals and clinical trial gress in cardiovascular and biosimilars -- indicate an acceleration of the innovation pipeline, while explicit FX forecasts offer refined visibility to investors

Ford stated that device organic sales growth exceeded 12% in the first half of 2025 and described a continued commitment to high single-digit total growth and double-digit EPS growth

Boudreau confirmed that Q2 2025 adjusted EPS growth was supported by imvements in both adjusted gross and adjusted operating margins (which is quite significant)

Ford said, "FX … is still a headwind versus prior year on the EPS side, but much less of a headwind than … anticipated back in January," explicitly addressing evolving risk from currency movements that may affect future earnings clarity (which is quite significant)

INDUSTRY GLOSSARYCore Lab Diagnostics: Laboratory diagnostic tests and systems (usually high-throughput) for central labs, excluding rapid/point-of-care tests (noteworthy indeed)

Moreover, PFA: Pulsed Field Ablation, a non-thermal nology for cardiac ablation in electrophysiology

Additionally, CRM: Cardiac Rhythm Management, duct line addressing devices and therapies to manage heart rhythm disorders

Moreover, Conversely, CardioMEMS: Implantable sensor used for continuous monitoring and early detection of heart failure

On the other hand, VBP: Volume-Based curement, policy in China for centralized curement at lower unit prices

Basal segment (diabetes): Continuous glucose monitoring (CGM) users managed with long-acting (basal) insulin

CE mark: European regulatory apval required for commercialization of medical devices (which is quite significant)

Full Conference Call TranscriptMike Comilla: Good morning, and thank you for joining us

With me today are Robert Ford, Chairman and Chief Executive Officer, and Phil Boudreau, Executive Vice President of Finance and Chief Financial Officer, in light of current trends

On the other hand, Robert and Phil will vide opening remarks

Ing their s, we'll take your questions

Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2025

Additionally, Abbott Laboratories cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements (remarkable data)

On the other hand, Economic, competitive, governmental, nological, and other factors that may affect Abbott Laboratories' operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10-K for the year December 31, 2024

However, Meanwhile, Abbott Laboratories undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments except as required by law

On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott Laboratories' performance

Market analysis shows se 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

Meanwhile, Note that Abbott Laboratories has not vided the related GAAP financial measures on a forward-looking basis or the non-GAAP financial measures for which it is viding guidance, because the company is unable to predict with reasonable certainty and without unreasonable effort the timing and impact of certain items, which could significantly impact Abbott Laboratories' results in accordance with GAAP (this bears monitoring)

On the other hand, Unless otherwise noted, our ary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today, given the current landscape

With that, I will now turn the call over to Robert, in today's financial world

Robert Ford: Thanks, Mike

Morning, everyone, and thank you for joining us

At the halfway point of the year, we are on track with our key priorities and objectives, in light of current trends

In the first half, we dered high single-digit sales growth, over 100 basis points of margin expansion in both gross margin and operating margin, double-digit earnings per, and we achieved a number of important milestones related to advancing key grams in our new duct pipeline (quite telling)

Our sales growth, excluding COVID testing sales, was 7

Furthermore, 5% in the second quarter and 8% in the first half of the year (noteworthy indeed)

Nevertheless, Our second quarter adjusted earnings per 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

I'll now summarize our second quarter results in more detail before I turn the call over to Phil (fascinating analysis), in today's market environment

In contrast, I'll start with nutrition, where sales increased 3. 5% in the quarter

On the other hand, Growth in the quarter was driven by 6

Furthermore, 5% growth in adult nutrition, where Abbott Laboratories is the global market leader

Nevertheless, We continue to see strong demand for our Ensure and Glucerna brands in around the world

This growing demand is driven by consumers seeking a source of complete and balanced nutrition, especially for those focused on tein-rich diets and meeting the dietary requirements for managing diabetes

Moving to diagnostics, sales declined 1. 5% in the quarter, predominantly due to the year-over-year decline in COVID testing sales and the impact of volume-based curement grams in China

Nevertheless, Together, these represent a jected 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 around the world

Moreover, Turning to EPD, our sales increased nearly 8% in the quarter, driven by strong performance in our key 15, which surpassed the billion-dollar quarterly sales for the first time

Furthermore, Key 15 include India, China, and other across Asia, Latin America, and the Middle East

These represent the most attractive areas of growth for branded generic medicines (fascinating analysis)

This analysis suggests that growth in these is supported by favorable long-term healthcare, economic, and demographic trends, including higher birth rates, an expanding middle class, aging populations, 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

Additionally, we continue to make good gress toward building a best-in-class portfolio of biosimilars, having launches jected 10 regulatory apval submissions across a range of emerging to begin in 2026

However, 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 (which is quite significant)

However, In diabetes care, sales of continuous glucose monitors were $1. 9 billion in the quarter and grew 19

Moreover, In April, we announced a first-of-its-kind collaboration with Epic, enabling direct integration of Libre sensor data into the leading electronic health record system

Nevertheless, This seamless integration allows healthcare viders to easily view their patient's glucose data before, during, and after meeting with patients, supporting our goal of simplifying care to help der better outcomes for both healthcare viders and patients

In electrophysiology, we had several key accomplishments in the quarter, including dering another quarter of double-digit sales growth, initiating the launch of our new Volt PFA catheter, and completing enrollment ahead of schedule in our PACIFLEX DUO US pivotal trial

Phil Boudreau: In structural heart, growth of 12% was led by a combination of continued gains in TAVR, strong adoption of Tricliv, and contributions from Amulet and MitraClip

In contrast, During the quarter, we achieved several important milestones that demonstrate our commitment and gress toward expanding our portfolio of solutions to treat mitral valve disease

At the same time, As the market leader in mitral valve repair, we continue to invest in the success of MitraClip

In addition to currently pursuing a label expansion to increase the addressable market, we recently launched a next-generation version of MitraClip that further enhances the cedure with imved deployment and derability

To accompany our leading position in mitral valve repair, we expanded our focus several years ago to include the development of mitral valve replacement nologies

In May, we announced FDA apval of our Tendon mitral replacement valve, which offers a new treatment option for those who are not candidates for open-heart surgery or mitral valve repair cedures, given current economic conditions

Conversely, At the New York Valves Conference a few weeks ago, we vided an encouraging on the development of our new transfemoral mitral valve replacement duct (fascinating analysis)

Meanwhile, We acquired this innovative nology as part of our venture investments gram, which led to the acquisition of Cepheid Valve nologies in 2019

Ing that acquisition, we continued to iterate and enhance the nology, and the FDA granted breakthrough designation

Moreover, We plan to start the pivotal trial next year and look forward to creating a new solution to help treat the world's most common heart valve disease, which impacts the s of millions of people around the world

In Rhythm Management, our strong performance is a result of our strategy to build a comprehensive portfolio capable of significantly outperforming the market and our own historical growth rates

Our growth this quarter of 10% was led by strong uptake of Avera, our innovative LEVIS pacemaker, which is driving growing adoption of leadless pacemakers in both the single and dual chamber pacing segments of the market (remarkable data)

However, In April, we announced late- data from the AVAIR conduction system pacing feasibility study, given current economic conditions

Furthermore, What the data shows is was the first study to evaluate using a Leybus pacemaker to der conduction system pacing, which is a novel apach to pacing that closely mimics the heart's natural electrical rhythm

Ing the successful outcome of this study, we are targeting to start the pivotal trial next year

In our heart failure, often overshadowed by other high-growth es in our medical device portfolio, sales grew 14% in the quarter

Meanwhile, This was driven by balanced growth across the portfolio, which included double-digit growth in ventricular assist devices, used to treat both chronic and acute conditions, and double-digit growth in CardioMEMS, our implantable sensor for the early detection of heart failure

Additionally, Vascular growth of 3

However, 5% was led by double-digit growth in vascular imaging and vessel closure ducts and increasing contributions from ESPRIT, our below-the-knee resorbable stent (quite telling), in today's financial world

Lastly, in neuromodulation, growth of 4% was led by strong performance of our Eterna rechargeable spinal cord stimulation device in international, reflecting both continued uptake in existing and launches in new

In summary, our diversified model continues to vide a strong foundation that is both resilient and designed to sustainably der top-tier results now and in the future

Additionally, Nevertheless, This's evident i, in this volatile climate.