Healthcare product and device company Abbott Laboratories (NYSE: ABT) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 6.9% year on year to $11.37 billion. Its non-GAAP profit of $1.30 per share was in line with analysts’ consensus estimates.

Is now the time to buy ABT? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Abbott Laboratories’ third quarter results met Wall Street’s expectations for both revenue and non-GAAP profit, but the market reacted negatively, with shares declining over 4%. Management pointed to double-digit growth in medical devices, led by diabetes care and electrophysiology, as key drivers for the quarter. CEO Robert Ford commented that “recently launched new products generated nearly $5 billion in sales this quarter,” highlighting the contribution of new offerings. However, ongoing headwinds in the diagnostics segment—especially in China—continued to weigh on results, and the company acknowledged competitive challenges in U.S. pediatric nutrition.

Looking ahead, Abbott Laboratories’ management reaffirmed its full-year non-GAAP EPS guidance and outlined several drivers for future growth, including a robust new product pipeline, anticipated easing of headwinds in diagnostics, and ongoing investments in clinical trials. CEO Robert Ford emphasized that “high single-digit top line growth and double-digit EPS growth” remain achievable, based on momentum in medical technology and pharmaceuticals, upcoming launches such as the Volt PSA catheter in the U.S., and the potential for new regulatory coverage in diabetes care. Management also cautioned that tariff impacts and competitive pressures in select markets will persist into next year, but they remain confident in the durability of the company’s portfolio.

Key Insights from Management’s Remarks

Management described the quarter as driven by strong performance in medical devices and adult nutrition, while diagnostics and U.S. pediatric nutrition faced notable challenges.

• Medical devices momentum: Double-digit sales growth in diabetes care, electrophysiology, cardiac rhythm management, heart failure, and structural heart segments led the quarter. The diabetes division saw 17% growth in continuous glucose monitors, with international and U.S. demand both highlighted as ongoing strengths.

• Diagnostics headwinds in China: Core lab diagnostics growth was limited by “challenging market conditions in China impacting both price and volume,” according to CEO Robert Ford. Excluding China, core lab sales grew 7%, and management pointed to new product introductions as mitigating some regional pressures.

• Adult nutrition success: International sales of Ensure and Glucerna fueled 10% growth in adult nutrition outside the U.S., aided by new product launches and positive demographic trends. However, the U.S. pediatric nutrition segment lost market share due to increased competition and the expiration of state contracts.

• Biosimilars and pipeline progress: Management advanced regulatory approvals for multiple biosimilar products, with ongoing launches planned across new geographies. The company also invested in a suite of clinical trials across its portfolio, including new cardiac and diabetes technologies.

• Tariff and margin impacts: CFO Philip Boudreau noted that tariffs reduced gross margin compared to last year, but highlighted ongoing mitigation efforts and operational improvements across the supply chain. Adjusted operating margin held steady year-on-year, with teams focused on expanding gross margin in the coming quarters.

Drivers of Future Performance

Abbott Laboratories expects future performance to be shaped by continued product launches, easing diagnostic headwinds, and disciplined investment in growth initiatives.

• New product rollout cadence: Management expects momentum from recent and upcoming launches—including the Volt catheter, dual analyte diabetes sensors, and biosimilars—to drive high single-digit organic sales growth. CEO Robert Ford stated that “new product launches here that will add to our sales and sales growth…will gain momentum over the course of the year.”

• Diagnostics recovery and geographic expansion: The company anticipates that headwinds in China will moderate, with volume trends showing early signs of recovery, while U.S. and European diagnostics are expected to benefit from share gains and new business wins. Ford described diagnostics as “set up for a nice recovery year next year.”

• Margin improvement focus: Tariffs remain a near-term challenge, but operational initiatives and supply chain improvements are expected to support margin expansion. CFO Philip Boudreau commented on “dedicated teams that drive constant ideation and execution throughout our supply chains,” aiming to maintain gross margin above 57%.

Catalysts in Upcoming Quarters

In upcoming quarters, our analyst team will monitor (1) the adoption pace and feedback from new product launches like the Volt catheter and dual analyte sensors, (2) progress on mitigating diagnostic headwinds in China and sustaining share gains in diagnostics outside China, and (3) the recovery of U.S. pediatric nutrition market share following recent contract wins and product launches. Ongoing margin improvement efforts and regulatory milestones in biosimilars and structural heart devices will also be critical indicators.

Abbott Laboratories currently trades at $128.42, down from $133.26 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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