Abbott Laboratories

fourth 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 touchtone 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 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 results for 2026. 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 31, 2024. 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. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's 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 gap financial measures on a forward-looking basis for the non-gap 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 gap 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. Before discussing our fourth quarter results, I want to take a moment to reflect on 2025, a year that demonstrated Abbott's leadership in innovation, discipline execution, and strategic actions taken to position the company for sustainable long-term growth. Innovation continues to be the foundation of our success. In 2025, we achieved several important milestones that strengthen our position for the future, including regulatory approvals for Volt and TactiFlex Duo PFA products, a new indication for Navitor TAVR valve, CMS, national coverage for TriClip and CardioMems, completing enrollment in our pivotal trial to bring a new LAA device to market, filing for FDA approval for our dual glucose ketone sensor, initiating the pivotal trial of our coronary IVL device, starting the launch sequence in EPD to bring biosimilars to emerging markets, and recently starting the launch sequence in nutrition to bring new products to market that meet evolving consumer preferences. 2025 was also a year of disciplined execution We delivered top-tier margin expansion and achieved our original target of double-digit earnings growth in earnings per share, despite the implementation of new tariffs and heightened market challenges in China. Finally, in 2025, we made important strategic moves to shape Abbott's future. Our announced acquisition of Exact Sciences will allow Abbott to enter and lead in the fast-growing cancer diagnostics market And that's a new high growth business with an attractive pipeline to the Abbott portfolio. We expect 2026 to be another year powered by innovation, operational excellence, and strategic execution. As we announced this morning, we forecast the midpoint of our 2026 organic sales growth range to be 7% and the midpoint of our adjusted earnings per share range to reflect 10% growth. I'll now summarize the fourth quarter results in more detail. I'll start with nutrition, where sales declined in the quarter. Abbott has been in the nutrition business for more than 60 years, and with that history comes experience, not just in times of growth, but in times that require navigating challenges. And as I mentioned last quarter, the US pediatric business is seeing an impact from market share loss, partly due to the loss of a large weight contract last year. But our results this quarter underscore a broader challenge, which is the need to reignite volume growth, a challenge many consumer goods businesses face today. Over the last several years, we've seen manufacturing costs and nutrition rise, in part due to a post-pandemic driven surge in commodity costs that remains in our cost base today. We have increased prices to help mitigate the impact of higher manufacturing costs. but those price increases in the current economic environment have become a factor in constraining volume growth. Many consumer good businesses are facing this dynamic. Higher manufacturing costs led to higher prices, which in turn are suppressing demand as consumers become increasingly more price sensitive. Path is not sustainable long term, so we began to make changes in the fourth quarter. Our goal is to transition our business back to one with a more balanced growth profile, with volume growth playing a greater role going forward. In the fourth quarter, we began implementing price and promotion initiatives to help start the process of reigniting volume growth. To further drive volume growth, we are increasing our focus on innovation, which is an area that was deprioritized the last few years, given the necessary heavy focus on production and supply chain management in this business. Following the launch of two new versions of Ensure late last year, we expect to launch at least eight new products over the course of the next 12 months. We expect performance in the nutrition to remain challenged in the first half of the year with a return to growth in the second half. While this transition back to a more sustainable volume driven business has consequences on our near term results, these are the right steps to take to better position the business for longer term success. Moving to diagnostics, sales declined 3.5% due to the anticipated year-over-year decline in COVID testing sales. CoreLab diagnostics grew 3.5%, achieving a third consecutive quarter of accelerating growth and building steady momentum as we enter 2026. For the full year, excluding China, growth in CoreLab diagnostics was 7%, reflecting durable demand in markets around the world. In point-of-care diagnostics, SILs grew 7% in the quarter, driven by adoption of our high-sensitivity troponin test, which allows for earlier and more accurate detection of heart attack. Turning to EPD, where SILs increased 7% in the quarter. Growth was well-balanced across the markets and therapeutic areas that we participate in, including double-digit growth in India and several countries across Latin America and the Middle East. By focusing on high-demand therapies in faster-growing markets, EPD delivered its fifth consecutive year of sales growth, exceeding 7%. And I'll wrap up with medical devices, where sales grew 10.5%. In diabetes care, sales of continuous glucose monitors grew 12% in the fourth quarter and 17% for the year, with sales in 2025 exceeding $7.5 billion. This marks the third consecutive year that our CGM sales have grown by more than a billion dollars. Our success in CGM continues to be driven by strong underlying market fundamentals, a leading position in cost and scale, and an unwavering commitment to market leading innovation. These factors have led to a continued increase in adoption across all of the various use groups. In electrophysiology, sales grew double digits in the U.S. and internationally. In December, we announced FDA approval of our Volt PFA catheter, which represents our first PFA product offering in the United States. And earlier this week, we announced that we obtained CE Mark for our new TactiFlex Duo ablation catheter, which offers both RF and PFA energy to treat patients battling AFib. In structural heart, Growth was driven by double-digit growth in Navitor, double-digit growth in Triclip, double-digit growth in MitraClip. In the coming weeks, we'll achieve an important milestone by completing enrollment in our CATALYST trial. This trial is evaluating the performance of amyloid left atrial appendage device compared to oral anticoagulants in patients with AFIT. This trial is designed to generate the evidence to demonstrate the clinical benefits of AMULET, which could lead to broader adoption and expansion of the addressable market. In heart failure, growth of 12% was driven by growth across our market-leading portfolio of ventricular assist devices, which offer treatment for chronic and temporary conditions, and growth in cardiomems, our implantable sensor used for the early detection of heart failure. Our investment strategy in medical devices is based upon a two-pronged approach. We invest to sustain strong performance in high-growth segments like diabetes, structural heart, electrophysiology, and heart failure. And we invest to increase the growth outlook in more foundational segments like rhythm management and vascular. While the investments in traditionally high-growth segments tend to get more attention, The investments we've made in our foundational businesses are generating very impressive returns. In rhythm management, growth of 12% was led by continued strong uptake of our leadless pacemaker, Aver. For the full year, growth of 10% in rhythm management represents the third consecutive year of significantly outperforming the market. With Aver and the investments we're making in conduction system pacing and other novel technologies, we see the $10 billion rhythm management market as a great opportunity to capture market share and drive sustainable growth for years to come. And vascular growth of 6.5% was led by double-digit growth in vessel closure products and growth from the spree are below the knee resorbable stent. For the full year, vascular sales grew 5%, making this the second consecutive year vascular has delivered mid-single-digit growth. With the expected approval of our coronary IVL device next year, we expect growth in vascular to follow a similar pattern of acceleration that we've seen in rhythm management. And lastly, a neuromodulation growth of 5.5% was led by strong international growth to return our rechargeable spinal cord stimulation device. So in summary, despite facing some challenges in 2025, we achieved our original target of double digit earnings per share growth Our new product pipeline continues to be highly productive. And combined with the strategic steps we took to shape the company for the future, we're well positioned for accelerating growth in 2026. And I'll turn over the call to Phil.