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ABBOTT LABORATORIES (ABT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered high single-digit organic growth (6.9%) and double-digit adjusted EPS growth; adjusted EPS of $1.09 finished at the high end of guidance, with gross margin up 140 bps and operating margin up 130 bps year over year .
  • Versus Street: Adjusted EPS modestly beat consensus, while revenue was slightly below; management reaffirmed full-year guidance (organic sales 7.5%-8.5%, adjusted EPS $5.05-$5.25) and provided Q2 EPS of $1.23–$1.27 .
  • Devices led growth (Diabetes Care +16.5% reported; CGM sales $1.7B, +21.6% organic), offsetting Diagnostics declines tied to COVID testing and China VBP; Core Lab grew organically, ex-China strength noted on the call .
  • Catalysts: Volt PFA CE Mark and early EU commercialization, strong 2-year TRILUMINATE data for TriClip (reduced HF hospitalizations), and initiation of the TECTONIC IVL U.S. pivotal trial support medium-term device growth .
  • Tariffs and Pillar 2 tax emerged as macro headwinds; management detailed multi-pronged mitigation, maintaining FY EPS guidance and indicating FX drag now ~1% on full-year reported sales (improved from ~2.5% prior) .

What Went Well and What Went Wrong

What Went Well

  • Devices strength: Worldwide Medical Devices sales +9.9% reported and +12.6% organic; CGM sales reached $1.7B (+18.3% reported, +21.6% organic), with U.S. CGM up 30% per prepared remarks .
  • Margin expansion: Adjusted gross margin 57.1% (+140 bps) and adjusted operating margin 21.0% (+130 bps), driven by mix and execution; “Gross margin expansion has always been a significant element of Abbott's company culture” (CFO) .
  • Pipeline/progress: Volt PFA CE Mark and early EU cases; TriClip 2-year pivotal data reduced HF hospitalizations; IVL TECTONIC IDE trial kicked off—broadening structural heart and EP opportunity set .

What Went Wrong

  • Diagnostics headwinds: Global Diagnostics sales −7.2% reported (−4.9% organic) on weak COVID testing and China VBP pressure; Rapid Diagnostics −17.3% reported, COVID testing sales fell to $84M from $204M YoY .
  • China VBP impact: Core Lab reported −2.3% but +0.9% organic; management highlighted VBP in China as the key drag, with no volume offset—price hit without share gains .
  • Macro friction: Tariffs (few hundred million half-year impact) and Pillar 2 tax (+~$200M expense) raised investor concerns; management outlined mitigations and maintained FY guidance .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Billions)$10.635 $10.974 $10.358
Adjusted Diluted EPS ($)$1.21 $1.34 $1.09
GAAP Diluted EPS ($)$0.94 $5.27 $0.76
Adjusted Gross Margin (% of sales)56.3% 56.9% 57.1%
Adjusted Operating Margin (% of sales)——21.0%
Organic Sales Growth (%)7.6% 8.8% 6.9%
COVID-19 Testing Sales ($USD Millions)$265 $176 $84

Segment breakdown – Q1 2025:

SegmentSales ($USD Billions)Reported YoY %Organic YoY %
Nutrition$2.146 3.8% 6.8%
Diagnostics$2.054 (7.2)% (4.9)%
Established Pharmaceuticals$1.260 2.7% 7.8%
Medical Devices$4.895 9.9% 12.6%

Medical Devices subsegments – Q1 2025:

SubsegmentSales ($USD Billions)Reported YoY %
Rhythm Management$0.585 4.0%
Electrophysiology$0.629 7.3%
Heart Failure$0.339 11.4%
Vascular$0.710 3.0%
Structural Heart$0.577 11.9%
Neuromodulation$0.228 1.0%
Diabetes Care$1.827 16.5%

KPIs – Q1 2025:

KPIValue
CGM Sales (Diabetes Care)$1.7B
COVID-19 Testing Sales$84M
Core Lab Diagnostics Organic Growth+0.9%
Core Lab ex-China (call commentary)+6.5% growth
Adjusted Gross Margin bps change YoY+140 bps
Adjusted Operating Margin bps change YoY+130 bps

Comparison to consensus – Q1 2025:

MetricActualConsensus*Surprise
Adjusted Diluted EPS ($)1.09 1.0713*+0.0187 (+1.7%)
Revenue ($USD Billions)10.358 10.417*−0.059 (−0.6%)

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Sales GrowthFY 20257.5%–8.5% 7.5%–8.5% Maintained
Adjusted Operating MarginFY 202523.5%–24.0% 23.5%–24.0% Maintained
Adjusted Diluted EPSFY 2025$5.05–$5.25 $5.05–$5.25 Maintained
Adjusted Diluted EPSQ2 2025—$1.23–$1.27 New
FX impact on reported salesFY 2025~2.5% unfavorable (Jan call) ~1% unfavorable (Apr call) Improved
Dividend per shareQ1 2025$0.59 (404th; paid Feb 14, 2025) $0.59 (405th; payable May 15, 2025) Maintained

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
Tariffs/macroNot a focusPillar 2 tax and FX framed in guidance Tariffs impact “few hundred million” half-year; multi-lever mitigation; FX now ~1% FY drag New headwind; managed
Diagnostics & China VBPAnticipated VBP impact; ex-China strength Core Lab +4% ex-COVID; strong Rapid ex-COVID Reported declines on COVID/VBP; ex-China Core Lab +6.5% Stabilizing ex-China
EP/PFAVOLT-AF IDE enrollment ahead of schedule High single-digit EP; bridge to PFA Volt CE Mark; EU launch; U.S. submission in 2025, approval targeted early 2026 Accelerating
Structural Heart+16% growth; TriClip adoption; CMS NCD initiated +23% growth; diversified portfolio (Navitor, Amulet, TriClip) Sustained growth; 2-year TRILUMINATE data reduces HFH Positive momentum
Diabetes/Libre+21% Q3; Lingo U.S. launch $6.5B FY CGM; U.S. +27%; supply catching up $1.7B Q1 CGM; U.S. +30%; basal coverage/connected pumps/Lingo expansion Strong multi-year driver
Legal/regulatoryNEC litigation context (agency joint statement referenced) Pillar 2 tax headwind; balanced capital allocation Tariff advocacy via AdvaMed; “hope is not a strategy” Active engagement

Management Commentary

  • “Overall, we achieved our target growth objective, delivering high single-digit sales growth and double-digit earnings per share growth… adjusted earnings per share of $1.09 grew 11% versus the prior year and finished at the high end of our guidance range.” — Robert Ford .
  • “Adjusted operating margin was 21% of sales, which reflects an increase of 130 basis points compared to prior year.” — Phil Boudreau .
  • “Right now, we estimate the tariff impact in ’25 to be a few hundred million dollars… we feel very comfortable… we can cover an impact of tariff… through short-term and long-term sustainable mitigations.” — Robert Ford .
  • “Excluding China, Core Laboratory sales grew 6.5%.” — Robert Ford .
  • “In Diabetes Care, sales of continuous glucose monitors were $1.7 billion in the quarter and grew more than 20%, including growth of 30% in the United States.” — Robert Ford .

Q&A Highlights

  • Tariffs: Estimated “few hundred million” half-year impact starting Q3; mitigation via manufacturing network, FX, tax, interest, inventory tactics; intent to build sustainable long-term offsets rather than temporary gap-closures .
  • EP/PFA: Volt CE Mark earlier-than-expected; EU rollout through 2H; U.S. submission in 2025 and base-case approval early 2026; mapping leadership and portfolio integration emphasized .
  • Diagnostics strategy: VBP in China is price hit without volume offset; strong performance in U.S., EMEA, LatAm and transfusion; NAT expansion investments (Illinois/Texas) cited .
  • Margins: Gross margin expansion expected to continue; tariffs largely felt in COGS; operating leverage complements GM expansion .
  • Pillar 2 tax: Adds ~150 bps to adjusted tax rate and ~$200M expense; management will offset through disciplined cost management and portfolio growth .

Estimates Context

  • Q1 2025: Adjusted EPS of $1.09 vs consensus 1.0713* (beat); revenue $10.358B vs consensus $10.417B* (slight miss). Management highlighted the EPS beat and high-end delivery within guidance .
  • FY 2025: Street adjusted EPS 5.155* and revenue $44.667B* sit within Abbott’s reaffirmed EPS range ($5.05–$5.25) and consistent with organic growth outlook (7.5%–8.5%) .
  • Implication: Modest Q1 beat on EPS with reaffirmed FY guides suggests limited upward revisions near-term; devices outperformance and macro mitigation (tariffs/FX) are key variables for estimate trajectories.

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Devices-led growth remains durable (Libre, TriClip, Navitor, Aveir) with multiple new catalysts (Volt PFA EU launch; IVL TECTONIC; TriClip data) supporting 2H acceleration and 2026 visibility .
  • Diagnostics trough dynamics continue given COVID normalization and China VBP; ex-China Core Lab growth and transfusion NAT buildout should gradually offset .
  • Margin story intact: +140 bps GM and +130 bps OM in Q1, reaffirmed FY OM guide; watch COGS effects from tariffs and FX as company executes mitigations .
  • Guidance credibility: FY organic growth (7.5%–8.5%) and EPS ($5.05–$5.25) maintained despite new macro headwinds—management’s mitigation plan and diversification underpin confidence .
  • Near-term trading: EPS beat and reaffirmed guide are supportive; any incremental updates on tariffs, Volt adoption, or TriClip reimbursement (NCD timing) could be catalysts .
  • Medium-term thesis: Structural Heart and EP pipeline depth, CGM scale/penetration, and emerging market EPD portfolio (biosimilars) position Abbott for sustained high-single-digit top-line and double-digit EPS growth .
  • Risk watch: Tariff trajectory, China VBP expansion pace, Pillar 2 tax implementation, and COVID testing noise in Diagnostics; monitor FX sensitivity and pricing stability in medtech .