Abbott Laboratories

Good morning and thank you for standing by. Welcome to Abbott's third quarter 2026 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 1 1 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 Comilla, 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. 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, 2025. 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 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 comparable sales growth. Our definition of comparable sales growth can be found on page two of our press release issued earlier today and a reconciliation table containing the data needed to calculate comparable sales growth can be found on pages 16 and 17. With that, I will now turn the call over to Robert.

Thanks, Mike. Today marks an important milestone in Abbott's history. Along with reporting our third quarter results, we announced our intention to separate our nutrition business into an independent, publicly traded company. This decision follows a comprehensive strategic review and reflects our strong belief that both Abbott and the nutrition business can create greater value and achieve their maximum potential as independent organizations. Abbott entered the nutrition business more than 60 years ago. Since that time, we built a strong foundation anchored by a talented global organization, iconic brands and established market leadership positions across the pediatric and adult nutrition categories. The nutrition market has evolved over time with the pace of change accelerating significantly in recent years. What was once predominantly viewed as a healthcare market, almost exclusively shaped by healthcare professionals, has increasingly become a market shaped by changing consumer preferences, wellness trends, and retail execution. While this market evolution is not inherently positive or negative, it has fundamentally changed the environment in which we operate. So to best position our nutrition business for maximum long-term success, we must evolve and adapt accordingly. At the same time, Abbott has strategically repositioned its portfolio over the past decade into attractive, high-growth markets that require sustained investment to drive innovation and support long-term growth. So we believe both businesses will be better positioned for the future as independent organizations, each with a distinct identity reflecting their different customer bases, growth profiles, investment requirements, and innovation cycles. This separation will enable both companies to sharpen strategic and operational focus, direct resources more effectively, and enhance commercial and R&D effectiveness. As an independent company, nutrition will be uniquely positioned to capitalize on the growing demand for healthy nutrition as consumers increasingly recognize the importance of metabolic health and the role healthy nutrition plays in disease prevention and overall wellness. The new nutrition company will be created from a position of strength. The team has done an exceptional job building a balanced growth model supported by sustainable mix of volume and price. The portfolio includes several iconic brands, including Similac, PediaSure, Ensure, Glucerna, and Pedialyte, which have market leading positions across the pediatric and adult nutrition categories. With approximately $8.5 billion in annual sales, 16,000 employees and 14 manufacturing sites. This will be the largest globally scaled pure play company in the healthy nutrition market. Given its scale and financial profile, we would expect this new company to qualify for inclusion in the S&P 500. And pleased to share that Daniel Salvadori, Executive Vice President and Group President of Established Pharmaceuticals and Nutrition Products, will become Chief Executive Officer of the new nutrition company. Daniel joined Abbott in 2014 as Senior Vice President in our established pharmaceuticals business for Latin America and also served as Executive Vice President of Nutrition Products for four years before being appointed to his current position in 2021. Throughout his career at Abbott, Daniel has demonstrated outstanding strategic insight and operational excellence. His broad international experience and proven track record of delivering results as a business operator make him exceptionally well suited for this role and I'm confident he will be a tremendous success. Daniel will be joined by an experienced leadership team with deep industry experience. And this is a battle tested team that has demonstrated exceptional resilience and dedication while navigating a dynamic and evolving operating environment. Following the separation, Abbott will remain one of the largest, most diversified and fastest growing healthcare companies in the world. The Abbott portfolio will consist of even stronger mix of higher growth, higher margin businesses powered by technology and innovation. As a result, we expect Abbott sales growth to accelerate and margin profiles to expand. While the Abbott portfolio will evolve, maintaining balance across products, payers, and geographies will remain a key strength and source of resilience for the company. We built this portfolio to hold market-leading positions in three of the most attractive areas of healthcare, medtech, diagnostics, and established pharmaceuticals. The portfolio was also intentionally built to align with durable health care trends, including an aging population, increasing prevalence of chronic disease, and a growing demand for earlier diagnosis and more personalized treatment. With market leading positions, an industry leading pipeline, and a proven ability to consistently generate strong earnings growth and cash flow, Abbott is exceptionally well positioned to deliver sustainable growth and create long term shareholder value in the years ahead. I cannot be more excited about this future. I have tremendous confidence in Abbott's future as an innovation-driven healthcare company, and I'm also confident in the opportunities that lie ahead for the new nutrition company. Most importantly, this creates two stronger organizations that will both continue to fulfill our mission of helping people live better lives. We look forward to sharing updates on our progress as we move through the separation process. I'll now review the third quarter results before I turn the call over to Phil. Sales grew 7% in the third quarter and earnings per share grew 9%, representing acceleration and growth on both top and bottom lines compared to our results in the first half of the year. Turning to diagnostics, where sales grew 6.5%, driven by performance in our core laboratory and cancer diagnostic businesses. CoreLab sales grew 5.5% driven by strong performance in the US, Europe, Japan, and Latin America. On our earnings call in July, I highlighted that test volume data sourced directly from thousands of instruments located across the US and around the world showed a pattern of strong and stable demand. We view this as a positive indicator of the underlying demand for healthcare more broadly. During the third quarter, Our testing data continued to support that view, with testing demand remaining healthy and at durable levels. In cancer diagnostics, sales growth of 14% was driven by Cologuard and contributions to growth from our precision oncology and international businesses. In September, we launched our first blood-based colorectal cancer screening test. As the only company to offer both stool-based and blood-based screening options We are expanding the options available to healthcare providers and patients to help achieve the goal of getting more people screened. Turning to nutrition, sales grew 5%, reflecting broad-based growth across all four categories, US pediatric, international pediatric, US adult, and international adult. As I mentioned earlier, the team has done an exceptional job executing a more balanced growth strategy, achieving a more sustainable mix of volume and price-driven growth. In pediatric nutrition, sales grew 9%, led by growth of 11% in the US. As I noted last quarter, the strong performance in the US includes the benefit from WIC contract wins secured earlier this year, which helped Abbott regain its market leadership position in both the WIC and non-WIC segments. In adult nutrition, sales increased 2%. Driven by growth of 3.5% in the US as retail consumption data continues to trend in a positive direction. We also continue to live strong growth on a sequential basis with worldwide nutrition sales increasing more than $100 million compared to the second quarter. And finally, we continue to make good progress advancing our innovation pipeline. During the quarter, we launched a new version of our Similac infant formula made with whole milk. This new product is the first and only commercially sterile, ready-to-feed liquid infant formula made with whole milk available in the United States. Turning to EPD, where sales increased 8.5% in the quarter. Our broad portfolio of prescription and over-the-counter medicines tailored to address local healthcare needs continues to drive strong growth across emerging markets. Growth in the quarter was broad-based across geographies and therapeutic areas, and this included double-digit growth in several countries across Asia, Latin America, and the Middle East, highlighting the strong and durable demand that has long been a hallmark of this business. And I'll wrap up with medical devices, where sales grew 8%. Growth was well-balanced across a portfolio led by double-digit growth in electrophysiology and rhythm management. In electrophysiology, our third quarter results reflect the early beginning of our growth acceleration phase. Growth in the quarter was mid-teens or high teens when excluding LAA. In the U.S., growth was in the high teens and exceeded 20% excluding LAA. This performance was driven by increasing adoption of our new Volt PFA catheter with momentum accelerating in September following the transition to a full U.S. market release in mid-August. International growth also accelerated as we continued to capture market share in Europe, driven by increasing uptake of our new PFA catheters and growth in other categories across our broad portfolio. In September, we received FDA approval earlier than expected for our TactiFlex Duo catheter. This catheter enables physicians to seamlessly switch between using RF and PFA energy during a procedure. Given physicians' familiarity with the TactiFlex platform, we expect to execute a broad U.S. launch starting in the fourth quarter. In the third quarter, we also received CE Mark for our new AMOLED 360 left atrial appendage device designed to help reduce the risk of stroke in patients with AFib. We look forward to bringing this new technology to the U.S. In rhythm management, sales grew 10%. Driven by increased adoption of AVERA across both single and dual chamber segments of the pacemaker market. This expanding use of AVERA is occurring in both the U.S. and international markets. And in diabetes care, continuous glucose monitoring sales grew 8% in the quarter. In August, we received FDA approval for LibreDuo, the world's first dual glucose ketone bioarable sensor. This marks the first time that people with diabetes will be able to monitor ketones without the need for traditional blood or urine tests. We expect to launch this new sensor in the U.S. in December. So in summary, we delivered an acceleration in growth on both top and bottom lines. Innovation continues to be a key differentiator for Abbott, highlighted by multiple new product approvals and launches that further strengthen our ability to deliver sustainable growth in the years ahead. and we took an important strategic step towards shaping our future through the planned creation of a new market leading nutrition company. I'll turn over the call to Phil.