ABT · Q2 2025 Earnings
BullishAbbott Laboratories
Reported July 17, 2025
30-second summary
30-second take: Abbott posted $11.14B in Q2 revenue (+7.4% YoY) with adjusted EPS of $1.26 and 100bps of expansion in both adjusted gross and operating margins, but the headline masks a widening split — Medical Devices grew 13.4% (Diabetes Care +20.2%, Electrophysiology +11.5%, Rhythm Management +10.9%) while Diagnostics declined 1% under a ~$700M full-year China VBP and COVID testing headwind. Management trimmed the top of the organic growth range (now 7.5–8.0% ex-COVID) but held adjusted EPS at $5.10–$5.20, and explicitly signaled momentum carrying into 2026 as headwinds reverse. The setup is a clean device-growth-plus-margin story partially obscured by a transient diagnostics drag that management is treating as quantified and finite.
Headline numbers
EPS
Q2 FY2025
$1.26
Revenue
Q2 FY2025
$11.14B
+7.4% YoY
Gross margin
Q2 FY2025
52.7%
Operating margin
Q2 FY2025
18.4%
Key financials
Q2 FY2025| Metric | Q2 FY2025 | YoY |
|---|---|---|
| Revenue | $11.14B | +7.4% |
| EPS | $1.26 | — |
| Gross margin | 52.7% | — |
| Operating margin | 18.4% | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment KPIs
Q2 FY2025| Segment | Q2 FY2025 | YoY |
|---|---|---|
| Nutrition | $2.212B | +2.9% |
| Diagnostics | $2.173B | -1.0% |
| Established Pharmaceuticals | $1.383B | +6.9% |
| Medical Devices | $5.369B | +13.4% |
| Diabetes Care | $1.981B | +20.2% |
| Core Laboratory Diagnostics | $1.358B | +2.2% |
| Rhythm Management | $0.673B | +10.9% |
| Electrophysiology | $0.7B | +11.5% |
| Continuous Glucose Monitor Sales Growth | 21.4% reported, 19.6% organic | — |
| Medical Devices Organic Growth | 12.2% | — |
Other KPIs
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Adjusted Gross Margin | 57.0% |
| Adjusted Operating Margin | 22.9% |
| Organic Sales Growth (excluding COVID-19 tests) | 7.5% |
| Adjusted Diluted EPS Growth | Double-digit |
| FY2025 Organic Sales Growth Guidance (excl. COVID-19) | 7.5% to 8.0% |
| FY2025 Adjusted Diluted EPS Guidance | $5.10 to $5.20 |
Management tone
Confidence ran higher than typical for an Abbott call, with management more granular on emerging-market milestones and pipeline timing than usual — suggesting elevated conviction that the device and pharma engines can absorb the diagnostics drag.
Emerging markets re-cast from secondary contributor to strategic engine. The "Key 15 markets" framing — India, China, and a band of Asia/LatAm/Middle East geographies — was elevated to centerpiece status with a concrete milestone: "Key 15 markets surpassed $1 billion in quarterly sales for the first time." This is the first time Abbott has anchored EM branded-generics as a discrete growth pillar with a dollar threshold, and it signals that Established Pharmaceuticals' 6.9% growth is being underwritten by a deliberate geographic strategy rather than incidental tailwinds.
Diagnostics reframed from growth contributor to quantified, finite headwind. Management was unusually direct: "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%." Rather than minimize the drag, they sized it ($1B cumulative across COVID, China VBP, HIV funding per the Goldman Q&A) and explicitly told investors it reverses into 2026. This is a confidence move — naming the number invites accountability.
Diabetes Care repositioned from CGM device sales to integrated healthcare platform. The Epic EHR integration announced in April was described as letting "healthcare providers easily view their patients' glucose data before, during, and after meeting with patients" — a workflow embed, not a feature. Combined with the dual-analyte ketone sensor (with clinical data showing 30–40% of intensive insulin users at elevated DKA risk), management is repositioning Libre's competitive moat from sensor accuracy to ecosystem lock-in. The 26% US Libre growth is being framed as the early innings of a TAM expansion, not a maturing share story.
Structural heart and rhythm management reframed as multi-shot pipelines. Tendine mitral approval in May, breakthrough designation for transfemoral mitral replacement, conduction system pacing pivotal trial planned for 2026, and a next-gen Aveir with 25% longer battery life were all surfaced in a single arc. The phrasing — "a comprehensive portfolio capable of significantly outperforming the market on our own historical growth rates" — is a notable upgrade from prior framings that emphasized category leadership. The pivot is from defending share in mature categories to launching adjacencies.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
David Roman · Goldman Sachs
Request to contextualize 2025 performance, understand the nature of headwinds (transient vs. permanent), and assess growth trajectory into 2026, particularly regarding diagnostics challenges and COVID testing decline.
Management attributed ~$1 billion in headwinds to COVID testing dropoff, China core lab price/volume issues, and HIV testing funding changes. Reaffirmed high single-digit 2025 growth despite headwinds; 2026 growth expected to accelerate as these headwinds reverse. Strong performance in device (12%+ growth), pharma (8%), and nutrition (5%) in H1. Emphasized diagnostic business strength outside China (US +7-8%, Europe +8%, Latin America high-teens) and confidence in 2026 momentum from pipeline launches (Volt, TactiFlex Duo, biosimilars).
Robbie Marcus · JP Morgan
Detailed questions on diabetes (Libre momentum, ketone sensor opportunity) and EP (Volt launch internationally, competitive positioning), including market penetration and product trajectory.
Libre US growth 26% with international acceleration; strong momentum across intensive insulin users, basal, and non-insulin segments. Dual analyte ketone sensor positioned as significant CGM market inflection point, with clinical data showing 30-40% of pediatric/adult intensive users at risk of DKA. Volt international rollout underway with excellent feedback; balloon design optimized for PVI with best-in-class paroxysmal efficacy data and superior tissue contact visualization reducing procedure time and fluoroscopy.
Vijay Kumar · Evercore ISI
Questions on Avera CRM penetration metrics, sustainability of double-digit growth, and P&L bridge explaining EPS guidance maintenance despite top-line deceleration and margin pressure.
Avera driving sustained CRM growth uplift (7% to 10%) through coordinated marketing/clinical/sales alignment; physician training +50%, implants per day doubled; next-gen Avera with 25% longer battery life (adding 2 years) in development; conduction system pacing pivotal trial starting 2026. On EPS: FX headwind ~4% historical average, currently slightly less (~1 nickel impact); tariffs ~$200M; de-risking from organic drivers and prior FX assumptions partially offset margin pressure.
Danielle · UBS
Question on structural heart/AMULET opportunity within context of competitor trial potential (expanding class market), TAM expansion, and whether Abbott is adequately positioned to benefit from market growth acceleration.
Abbott concurs competitor trial could drive market expansion ('rising tide' effect). Abbott pursuing own trial for AMULET competitive positioning; second-gen device under development targeting improved deployment/delivery ease. Pivotal trial enrollment underway with excellent physician feedback on sealing capability and anatomical range. Positioning second-gen as competitive within expanding AFib/structural heart market, with concomitant procedure opportunity.
Josh Jennings · TD Cowan
Questions on TAVR franchise growth expectations, Navitour commercial traction, pipeline (Bloom expandable, Cantor), and European competitive dynamics from Boston competitor exit.
Navitour sales doubled over past 2 years with strong international growth as primary driver; competitor exit in Europe creates market share opportunity. CE mark planned for low/intermediate risk expansion expected to accelerate growth. US expansion strategy: 20% of centers currently; doubling sales force by end of year to improve site access and productivity ramp expected into 2026. Balloon-expandable next-gen TAVR in development targeting end-of-decade launch.
What to watch into next quarter
Diagnostics ex-China stabilization — Core Lab grew 8% ex-China this quarter. Watch whether reported Diagnostics returns to positive YoY growth in Q4 as the COVID base normalizes; failure would suggest the $700M headwind is structural, not transient.
Libre international acceleration — US Libre at +26%. Management said international is accelerating but did not quantify. A specific international growth rate disclosure in Q3 (or implied via segment math) is the next proof point on the platform thesis.
Aveir CRM growth trajectory — CRM stepped from 7% to 8% to 10% over three reporting periods. Watch whether Q3 sustains double-digit CRM growth; sub-10% would suggest Aveir conversion is plateauing.
FY adjusted operating margin landing point — Guide is ~23.5% with Q2 actual at 22.9%. The math requires meaningful H2 expansion. Watch Q3 adjusted operating margin print against ~24% as the implied run-rate.
Pipeline trial starts — Management committed to conduction system pacing pivotal trial start in 2026 and transfemoral mitral pivotal trial in 2026. Any slippage disclosed in Q3 would undercut the "comprehensive portfolio" narrative.
Tariff and FX realization — Tariff impact guided at ~$200M and FX now flagged as roughly neutral FY (vs. prior headwind assumption); Q3 reported sales expected to see ~2% FX tailwind. Watch whether Q3 actuals confirm the FX swing — it is doing real work in holding EPS guidance.
Sources
- Abbott Laboratories Q2 2025 Earnings Press Release, Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1800/000162828025035135/abt-2025q2xexhibitx991.htm
- Abbott Laboratories Q2 2025 earnings call commentary and Q&A (prepared remarks and analyst exchanges)
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