Abbott Laboratories

Good morning and thank you for standing by. Welcome to Abbott's second quarter 2025 earnings conference call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star one one keys on your touch tone phone. This call is being recorded by Abbott. With the exception of any participants questions asked during the question and answer session, the entire call including the question and answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's express written permission. I would now like to introduce Mr. Mike Camilla, Vice President, Investor Relations.

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, Finance and Chief Financial Officer. Robert and Phil will provide opening remarks. Following their comments, 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. Abbott 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. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in item 1A, Risk Factors, to our annual report on Form 10-K for the year ended December 31st, 2024. Mike Valdes, Abbott 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. Mike Valdes, On today's conference call, as in the past non gap financial measures will be used to help investors understand at its ongoing business performance. These 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.com. Note that Abbott has not provided the related GAAP financial measures on a forward-looking basis for the non-GAAP financial measures for which it is providing 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's results in accordance with GAAP. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert.

Thanks, Mike. Good 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 the first half, we delivered high single digit sales growth, over 100 basis points of margin expansion in both gross margin and operating margin, double digit earnings per share, and we achieved a number of important milestones related to advancing key programs in our new product pipeline. Our sales growth excluded COVID testing sales with 7.5% second quarter and 8% in the first half of the year. Our second quarter adjusted earnings per share 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. I'll start with nutrition, where sales increased 3.5% in the quarter. Growth in the quarter was driven by 6.5% growth. In adult nutrition, where Abbott is the global market leader, we continue to see strong demand for Ensure and Glucerna brands in the markets around the world. And this growing demand is driven by consumers seeking a source of complete and balanced nutrition, especially for those focused on protein-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 procurement programs in China. These represent a projected 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 the markets around the world. Turning to EPD, our sales increased nearly 8% in the quarter. driven by strong performance in our key 15 markets, which surpassed $1 billion in quarterly sales for the first time. Key 15 markets include India, China, and other markets across Asia, Latin America, and Middle East. These markets represent the most attractive areas of growth for branded generic medicines. The growth in these markets is supported by favorable long-term health care, economic, and demographic trends, including higher birth rates and 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. And additionally, we continue to make good progress toward building a best-in-class portfolio of biosimilars, having completed 10 regulatory approval submissions across a range of emerging markets with launches projected to begin in 2026. And 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. In diabetes care, sales of continuous glucose monitors were $1.9 billion in the quarter and grew 19.5%. 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. This seamless integration allows healthcare providers to easily view their patients' glucose data before, during, and after meeting with patients, supporting our goal of simplifying care to help deliver better outcomes for both healthcare providers and patients. In electrophysiology, we had several key accomplishments in the quarter, including delivering a number delivering another quarter of double-digit sales growth, initiating the launch of our new Volt PFA catheter, and completing enrollment ahead of schedule in our PactiFlex Duo U.S. pivotal trial. In structural heart, growth of 12% was led by a combination of continued share gains in TAVR, strong adoption of TriClip, and contributions from Amulet and MitraClip. During the quarter, we achieved several important milestones that demonstrate our commitment and progress toward expanding our portfolio of solutions to treat mitral valve disease. As the market leader in mitral valve repair, we continue to invest in the success of MitraClip. So 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 procedure with improved deployment and deliverability. To accompany our leading position in mitral valve repair, we expanded our focus several years ago to include the development of mitral valve replacement technologies. In May, we announced FDA approval of our Tendine Mitral Replacement Valve, which offers a new treatment option for those who are not candidates for open heart surgery or mitral valve repair procedure. New York Valves Conference a few weeks ago, we provided an encouraging update on the development of our new transfemoral mitral valve replacement product. We acquired this innovative technology as part of our venture investments program, which led to the acquisition of Cephia Valve Technologies in 2019. And following that acquisition, we continued to iterate and enhance the technology, and the FDA recently granted breakthrough designation 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 lives 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 on our own historical growth rates. Our growth this quarter of 10% was led by strong uptake of AVERE, our innovative leadless pacemaker, which is driving growing adoption of leadless pacemakers in both the single and dual chamber pacing segments of the market. In April, we announced late breaking data from the AVERE conduction system pacing feasibility study. This was the first study to evaluate using a leadless pacemaker to deliver a conduction system pacing, which is a novel approach to pacing that closely mimics the heart's natural electrical rhythm. And following the successful outcome of this study, we are targeting to start the pivotal trial next year. In our heart failure business, often overshadowed by other high growth businesses in our medical device portfolio, sales grew 14% in the quarter. This was driven by balance 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. And vascular growth of 3.5% was led by double-digit growth in vascular imaging and vessel closure products and increasing contributions from ESPRIT, our below-the-knee resorbable stent. And lastly, in neuromodulation, growth of 4% was led by strong performance of our A-Turner rechargeable spinal cord stimulation device in international markets, reflecting both continued uptake in existing markets and launches in new markets. So in summary, our diversified model continues to provide a strong foundation that is both resilient and designed to sustainably deliver top-tier results now and in the future. And that's evident in our performance in the first half of the year, which, along with our outlook for the remainder of the year and the momentum heading into next year, aligns with our long-term sustainable growth objectives of delivering high single-digit growth, healthy margin expansion, and double-digit EPS growth. I'll now turn over the call to Phil.