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ABBOTT LABORATORIES (ABT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient growth and execution: revenue $11.142B (+7.4% YoY reported), adjusted EPS $1.26; both slightly above Wall Street consensus, with devices strength and margin expansion offsetting diagnostics headwinds . S&P Global consensus: EPS $1.257 and revenue $11.059B; ABT modestly beat on both.*
  • Adjusted gross margin rose to 57.0% (+100 bps YoY) and adjusted operating margin to 22.9% (+100 bps YoY), reflecting cost discipline and favorable mix in Medical Devices .
  • Guidance: FY25 adjusted EPS $5.10–$5.20 and organic sales growth (ex-COVID) 7.5%–8.0% maintained; Q3 adjusted EPS guided to $1.28–$1.32 .
  • The narrative focuses on robust Medical Devices (CGM $1.9B, +21.4% reported) and pipeline milestones (Volt PFA EU rollout, AVEIR progress, Tendyne TMVR approval), with de-risking in Diagnostics amid China VBP and lower COVID testing .

What Went Well and What Went Wrong

What Went Well

  • Medical Devices led performance: sales $5.369B (+13.4% reported; +12.2% organic), with double-digit growth in Diabetes Care, Heart Failure, Structural Heart, and Electrophysiology; CGM sales were $1.981B (+21.4% reported) on Libre momentum .
  • Margin expansion: adjusted gross margin 57.0% and adjusted operating margin 22.9%, each +100 bps YoY, underscoring productivity and mix benefits . CFO: “Adjusted EPS…was above the consensus estimate” and margins expanded vs prior year .
  • Strategic wins: FDA approval of Tendyne TMVR; Volt PFA EU launch and TactiFlex Duo pivotal enrollment ahead of schedule; AVEIR CSP feasibility data; new Georgia cardiovascular manufacturing investment plan .

What Went Wrong

  • Diagnostics contraction: total Diagnostics $2.173B (-1.0% reported; -1.4% organic), pressured by lower COVID testing ($55M vs $102M LY) and China VBP; Core Lab grew modestly (+2.2% reported, +1.6% organic) .
  • Macro headwinds: management cited ~$700M diagnostics headwind (China VBP + COVID testing) and tariffs impact “just under $200M,” with FX still a YoY EPS headwind (roughly ~$0.05) .
  • Sequential mix: while devices accelerated, diagnostics continued to lag; funding shifts in U.S. foreign aid for HIV testing added pressure to certain rapid testing lines .

Financial Results

Key Financials (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$10.974 $10.358 $11.142
GAAP Diluted EPS ($)$5.27 $0.76 $1.01
Adjusted Diluted EPS ($)$1.34 $1.09 $1.26
Adjusted Gross Margin (%)56.9% 57.1% 57.0%
Adjusted Operating Margin (%)—21.0% 22.9%
COVID Testing Sales ($USD Millions)$176 $84 $55
Adjusted EPS vs Consensus ($)——$1.26 vs $1.257*

Values retrieved from S&P Global.*

Segment Sales (Q2 2025; with YoY change)

SegmentSales ($USD Millions)YoY Reported %Organic %
Nutrition$2,212 +2.9% +3.4%
Diagnostics$2,173 -1.0% -1.4%
Established Pharmaceuticals$1,383 +6.9% +7.7%
Medical Devices$5,369 +13.4% +12.2%

Medical Devices Sub-Segments (Q2 2025)

Sub-SegmentSales ($USD Millions)YoY Reported %
Diabetes Care$1,981 +20.2%
Electrophysiology$700 +11.5%
Heart Failure$368 +14.7%
Structural Heart$636 +13.0%
Rhythm Management$673 +10.9%

Selected KPIs

KPIQ1 2025Q2 2025
Organic Sales Growth ex-COVID (%)8.3% (company) 7.5% (company)
CGM Revenue ($USD Billions)$1.7 $1.9
Adjusted EPS ($)$1.09 $1.26
Adjusted Gross Margin (%)57.1% 57.0%
Adjusted Operating Margin (%)21.0% 22.9%
Diagnostics COVID Sales ($USD Millions)$84 $55

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Sales Growth (ex-COVID)FY20257.5%–8.5% 7.5%–8.0% Narrowed/Lower top end
Organic Sales Growth (incl. COVID)FY2025—6.0%–7.0% Introduced
Adjusted Operating MarginFY202523.5%–24.0% ~23.5% Tightened (near low end)
Adjusted Diluted EPSFY2025$5.05–$5.25 $5.10–$5.20 Narrowed/maintained midpoint
Adjusted Diluted EPSQ3 2025$1.23–$1.27 (Q1 outlook for Q2) $1.28–$1.32 New quarterly guide
Dividend per shareQ2 2025$0.59 (declared Q1) $0.59 (payable Aug 15, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Tariffs/FXPreparing to absorb FX/tax while keeping double-digit EPS; margin plan intact Manufacturing network and inventory strategies; half-year tariff impact “few hundred million” starting Q3 Tariffs “just under $200M”; FX still YoY EPS headwind (~$0.05) Headwind quantified; mitigation ongoing
China VBP (Diagnostics)Core Lab ex-China double-digit; China pressure acknowledged Diagnostics down on China VBP; ex-China core lab grew mid-high single digits VBP + COVID testing = ~$700M FY25 headwind; shift of recovery to Q4 Persistent, recovery delayed
Diabetes (Libre/CGM)CGM $1.8B in Q4; 2024 ~$6.5B, +22%; share gains CGM $1.7B; expanding basal coverage, pump connectivity, LINGO OTC CGM $1.9B; Epic EHR integration; dual-analyte ketone sensor pipeline Strong growth; ecosystem expanding
EP/PFAMapping-led bridge; high single-digit EP growth Volt PFA CE Mark; dual-energy catheter trials Volt EU rollout; TactiFlex Duo pivotal enrollment; U.S. PFA path; EP double-digit Accelerating launches
Structural Heart23% growth; TAVR Navitor gains; TriClip data strong Continued momentum, label expansions Tendyne TMVR FDA approval; U.S. team expansion; CE mark label expansion timing favorable Portfolio broadening, commercial build
Biosimilars (EPD)Building portfolio; 5-year CAGR ~8% +15 biosimilars via agreements; launches over next 3 years 10 regulatory submissions; launches projected to begin 2026 Pipeline progressing
Supply Chain/ManufacturingGross margin programs; capex up 60% over years 90 sites; U.S.-based supply for U.S.; mitigate tariffs New U.S. cardiovascular facility by 2028 Capacity and localization as lever

Management Commentary

  • CEO: “Halfway through the year, we delivered high single-digit organic sales growth, double-digit EPS growth, significantly expanded our margin profiles, and continued to advance key programs…We see this momentum carrying into 2026.”
  • CEO on Diagnostics headwinds: “Drop-off on our COVID testing sales and some challenges in the China core lab market…together…over $1 billion of headwind…Still, we’re committing to high single-digit growth and double-digit EPS growth.”
  • CFO: “Adjusted gross margin…57% of sales…increase of 100 basis points…Adjusted operating margin…22.9%…increase of 100 basis points…For the third quarter, we forecast adjusted EPS…$1.28–$1.32.”

Q&A Highlights

  • Diagnostics: China VBP and lower COVID testing; recovery expectations shifted to Q4; ex-China core lab strength (U.S. +7–8%, Europe +8%, LatAm high teens) .
  • Tariffs/FX: Tariffs “just under $200M” headwind; FX EPS headwind “roughly a nickel”; multiple workstreams leveraging global manufacturing footprint to mitigate .
  • Diabetes Care: U.S. Libre growth ~26%; dual-analyte (glucose + ketone) sensor seen as “next-level” for intensive insulin users; pump integrations to enable rapid availability post-approval .
  • EP: Volt PFA EU rollout with strong early feedback; strategy to leverage mapping leadership; U.S. approval path targeted, with ongoing dual-energy catheter trial .
  • Structural Heart/TAVR/LAA: Navitor share gains and U.S. commercial expansion; second-gen Amulet and TriClip ease-of-use upgrades; label expansions align with competitor dynamics .

Estimates Context

  • Q2 2025 actual vs S&P Global consensus: Adjusted EPS $1.26 vs $1.257*; Revenue $11.142B vs $11.059B* — modest beats, reinforcing margin execution despite Diagnostics headwinds .*
  • Forward looks: Q3 2025 guided EPS $1.28–$1.32 vs consensus ~$1.299*; management’s FY25 EPS $5.10–$5.20 maintains double-digit growth at midpoint .*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Devices-led growth remains the cornerstone: Libre, EP, Structural Heart, and Heart Failure are driving double-digit growth and mix that supports margin expansion; continue to lean into devices exposure .
  • Guidance credibility is high: management held FY25 adjusted EPS and organic growth ex-COVID while explicitly quantifying headwinds and de-risking Diagnostics expectations (China recovery pushed to Q4) .
  • Diagnostics weakness is contained: despite VBP and COVID declines, ex-China Core Lab demand is healthy; watch for recovery cadence and new Alinity system initiatives .
  • Pipeline catalysts: Volt PFA rollout, AVEIR upgrades (longer battery, CSP pivotal in 2026), Tendyne TMVR approval, TriClip next-gen, Navitor label expansions; these support medium-term acceleration into 2026 .
  • Macro risk management: tariffs/FX headwinds are quantified with multi-year manufacturing mitigation plans; margin programs and spend leverage remain intact .
  • Diagnostics COVID drag fading: COVID testing now $55M in Q2 (vs $102M LY); underlying Diagnostics growth ex-COVID remains positive, reducing a historical overhang .
  • Dividend durability: $0.59 declared (406th consecutive), Dividend Aristocrat status underscores capital return consistency .