Abbott cuts 2026 sales growth view, plans to spin off nutrition business

Oct 21 — Abbott Laboratories cut its 2026 sales growth forecast on Wednesday and said it plans ​to separate its nutrition business, which includes baby formula, into a publicly traded company.

Shares of the company fell 4% in premarket trading.

Abbott joins Johnson & ‌Johnson in planning a business separation for 2027, as large healthcare companies reshape their portfolios to offload underperforming ⁠businesses and sharpen focus on higher-growth ​segments.

The nutrition division lost a major ⁠US government supply contract last year and faced higher manufacturing costs, prompting price ‌increases that hurt demand. ‌Its portfolio includes Similac infant formula and Ensure nutritional drinks.

The baby formula ⁠business has faced a series of setbacks ⁠since a 2022 recall and shutdown of Abbott's Sturgis, Michigan, plant that exacerbated a nationwide shortage. The company also faced lawsuits alleging its specialized formula for premature infants caused a potentially fatal bowel disease.

"This separation will benefit both companies," CEO Robert Ford said and added that Abbott's core portfolio of medical ‌devices, diagnostics and established medicines has compelling growth ​opportunities.

The separation is expected to be completed by the end of 2027, the company said.

"We think the stock trading lower is appropriate, with the potential for nutrition value-creation partially offsetting the moderated underlying business fundamentals," said J.P.Morgan analyst Robbie Marcus.

Abbott now expects 2026 sales growth of about 6%, compared with its prior expectation of between 6.5% and 7.5%.

RBC Capital Markets analyst Au Kendall said ​they view the forecast unfavorably to the extent of affecting the 2027 trajectory.

Third-quarter sales in ‌its medical devices ‌segment grew ⁠6.9% to $5.83 billion, but missed estimates of $5.88 billion, hurt by weaker-than-expected sales for its heart devices.

The company reported quarterly adjusted profit per share of $1.42 — in line with estimate. Total revenue for the third quarter came in at $13.01 billion. Analysts on average estimated $13 ‌billion, according to data ​compiled by LSEG.

The company tightened its 2026 adjusted ‌profit per share forecast ⁠to $5.50 to $5.55 from ​its prior view of $5.45 to $5.60.

(Reporting by Padmanabhan Ananthan and Christy Santhosh in Bengaluru; Editing by ​Joyjeet Das)

Related topics