ABT Abbott Laboratories 10-Q 2026-09-30 section summaries

Abbott (ABT) — Q3 and first nine months of 2026

Segment results

Diagnostics’ substantial growth reflects Exact Sciences, acquired March 23, 2026, with Cancer Diagnostics included in the segment. Nutritional Products’ Q3 growth contrasted with its year-to-date decline; Diagnostics and Medical Devices also grew year to date, though at different rates.

Consolidated segment reconciliation

Other, net in 2026 includes Exact Sciences acquisition costs and legal settlements. Nine-month share-based compensation includes $321M for cash settlement of Exact Sciences equity awards.

Acquisition and strategic developments

Abbott paid approximately $20.6B, or $105 per Exact Sciences common share in cash, for the March 2026 acquisition, funded mainly with $20.0B of long-term debt and the remainder from cash. Abbott also assumed approximately $2.8B of Exact Sciences debt, nearly all of which it repaid. Exact Sciences contributed $2.0B of net sales in 9M 2026; its post-acquisition earnings were not material to Abbott’s consolidated net earnings. The acquisition adds Cologuard, Oncotype DX and Cancerguard, establishing Abbott in cancer diagnostics.

Preliminary purchase accounting included $16.0B of acquired non-deductible intangible assets, $8.9B of non-deductible goodwill, $0.4B of net tangible assets, $2.7B of deferred tax liabilities and $2.0B of net debt. Q3 measurement-period adjustments increased acquired intangibles by $3.2B, with a corresponding goodwill reduction, and added approximately $100M of Q3 amortization expense. The allocation remains preliminary. Estimated annual amortization is $3.0B in 2026, $2.7B in 2027, $2.1B in each of 2028 and 2029, and $1.9B in 2030.

On a pro forma basis assuming the acquisition at the start of 2025, net sales were $13.0B in Q3 2026 and $37.5B in 9M 2026, versus $12.2B and $35.2B in the comparable 2025 periods. Pro forma earnings before taxes were $1.4B in Q3 2026 and $4.1B in 9M 2026; the latter includes $0.2B of interest expense and $0.3B of acquired-intangible amortization, and excludes $0.5B of directly attributable acquisition transaction expenses. These pro forma results are not necessarily indicative of actual or future results.

In October 2026 Abbott announced plans to separate Nutritional Products into an independent publicly traded company through a distribution of shares to Abbott shareholders. The separation is targeted by the end of 2027, intended to be tax-free for U.S. federal income tax purposes, and remains subject to approvals and other conditions.

Assets, debt and investment

Goodwill increased primarily with Exact Sciences, partly offset by $0.3B of foreign-currency translation reductions; no goodwill impairment was recorded in 9M 2026. September 30 goodwill by segment was $2.7B in Established Pharmaceuticals, $0.3B in Nutrition, $12.5B in Diagnostics and $17.2B in Medical Devices. Long-term debt issuance included $1.0B of floating-rate notes due 2029 and fixed-rate notes with rates from 3.700% to 5.600% and maturities from 2029 to 2066. Abbott repaid €1.14B (approximately $1.3B) of 1.500% notes at maturity in September.

Capital additions and material legal, tax and risk items

In Q3 Abbott recorded an approximately $670M charge for agreements resolving the Gill case and NEC claims brought on behalf of approximately 2,000 additional infants. The agreements are not admissions of liability; Abbott cannot reasonably estimate additional possible NEC losses, which could materially affect financial position, cash flows or results. In September Abbott also paid approximately $385M, plus attorneys’ fees and accrued interest, to resolve DOJ investigations and related federal and state claims concerning U.S. powdered infant formula manufacturing. Abbott says the settlement is not a finding of fault and that no evidence linked its products to illnesses or deaths associated with its 2022 voluntary recall. For other legal proceedings and environmental exposures, estimated possible losses were $430M–$450M, with $435M accrued; environmental cleanup exposure was not expected to exceed $10M in aggregate or $4M at any individual site.

Nine-month taxes included $540M of expense related to a deferred tax asset that had produced a significant non-cash tax benefit in a prior year, versus $460M in 9M 2025. Prior-year tax-position resolutions added $95M of net tax expense in 9M 2026, versus a $90M net tax benefit in 9M 2025. Abbott is contesting IRS assessments of $192M for 2017–18, $417M for 2019 and $443M for 2020, largely concerning income allocation between U.S. entities and foreign affiliates. The 2020 notice also disputes a deduction associated with an estimated $440M cash tax benefit available in another taxable year. Abbott is also appealing a $413M Malaysian tax assessment.

Other notable exposures and activity include $256M of contingent consideration, up from $1M, primarily due to Exact Sciences; foreign-currency cash-flow hedge notionals of $8.2B and other foreign-currency forward notionals of $12.8B at September 30; and $4.2B of interest-rate hedge notionals, up from $1.2B. Interest-rate swaps generated $260M of expense in 9M 2026, versus $17M of income in 9M 2025. Unrecognized share-based compensation was $641M, expected to be recognized over approximately three years; approximately 140M shares were reserved for future grants.

Abbott (ABT) — Q3 and first nine months of 2026

Sales and results

Sales grew 14.5% in Q3 and 11.9% in 9M; excluding foreign exchange (FX), growth was 14.8% and 10.5%, respectively. FX reduced reported Q3 growth by 0.3 percentage points but boosted 9M growth by 1.4 points. Gross margin declined amid higher Exact Sciences-related intangible amortization, higher costs and FX, partly offset by favorable mix and margin-improvement initiatives.

Q3 R&D expense increased 20.1% to $920M from $766M; 9M expense rose 16.9% to $2.6B, up $372M. Spending reflected Exact Sciences and continued development investment. SG&A rose 39.8% to $4.3B in Q3, up $1.2B, and 30.7% to $12.0B in 9M, up $2.8B. Drivers included Exact Sciences and integration costs, legal-settlement charges, increased selling and marketing, and FX.

Segment sales

Established Pharmaceuticals’ Q3 sales grew 6.8% (8.4% excluding FX), supported by emerging markets. Its 9M sales were $4.539B versus $4.154B, up 9.3% reported and 8.7% excluding FX.

Nutrition grew 5.1% in Q3 (4.9% excluding FX), but 9M sales fell 1.3% to $6.423B from $6.511B (-2.1% excluding FX), a reversal from the quarter’s growth. Weakness reflected lower adult nutrition and U.S. pediatric volumes: 9M U.S. pediatric sales declined 4.8% to $1.613B and U.S. adult nutrition fell 4.0% to $1.060B.

Diagnostics rose 46.7% in Q3 (46.6% excluding FX); 9M sales were $8.577B versus $6.480B, up 32.4% reported and 30.8% excluding FX. The acquisition of Exact Sciences was the primary driver: Cancer Diagnostics generated $1.983B of 9M sales from the March 23 acquisition date. Core Laboratory grew 4.0% excluding FX, supported by Alinity, partly offset by challenging conditions in China; Rapid and Molecular declined 5.4%, mainly on lower respiratory-virus test demand.

Medical Devices grew 6.9% in Q3 (7.4% excluding FX) and 9.6% in 9M to $17.218B from $15.712B (7.8% excluding FX). 9M FX-adjusted growth included Electrophysiology +13.8%, Rhythm Management +10.6%, Heart Failure +8.9%, Vascular +5.2%, Structural Heart +2.6%, Neuromodulation +1.3% and Diabetes Care +7.7%. Continuous glucose monitoring (CGM) sales were $6.2B versus $5.6B, up 8.3% excluding FX, reflecting continued U.S. and international adoption.

Acquisition, cash and capital allocation

Abbott acquired Exact Sciences for approximately $20.6B on March 23, funded primarily with $20.0B of long-term debt and the balance with cash. It also assumed approximately $2.8B of Exact Sciences debt, nearly all repaid by September 30. A Q3 measurement-period adjustment increased acquired intangible assets by $3.2B and reduced goodwill correspondingly, adding approximately $100M of Q3 amortization; the final purchase-price allocation could differ materially. The preliminary allocation included $16.0B of non-deductible acquired intangibles, $8.9B of non-deductible goodwill, $0.4B of acquired net tangible assets, $2.7B of deferred tax liabilities and $2.0B of net debt. Exact Sciences’ earnings since acquisition were not material to Abbott’s net earnings. The acquisition added cancer-diagnostics offerings including Cologuard, Oncotype DX and Cancerguard.

Operating cash flow declined approximately $700M year over year, primarily due to legal-settlement payments, higher inventory and cash payments for acquisition-related equity-award settlements; lower pension contributions and cash taxes partly offset the decline. Cash taxes were $1.3B in 9M 2026 versus $1.5B in 9M 2025; 9M 2025 pension contributions were $256M. The cash and working-capital declines largely reflected acquisition funding and debt repayment, alongside dividends, legal settlements, share repurchases and capital expenditures.

Abbott repurchased approximately 11.6M shares for $1.0B in 9M 2026, with $5.6B remaining under its October 2024 repurchase authorization. Q1–Q3 dividends were $0.63 per share each quarter, up 6.8% from $0.59 in the corresponding 2025 quarters. Abbott repaid €1.14B principal (approximately $1.3B) of 1.500% Notes at maturity in September 2026. Its long-term ratings were A+ from S&P and Aa3 from Moody’s, and it expects to maintain investment-grade ratings.

Tax matters, strategy and developments

Material tax disputes include IRS deficiency notices of $417M for 2019, $192M for 2017–18 and $443M for 2020, principally concerning income allocation between U.S. entities and foreign affiliates. Abbott is contesting the notices in Tax Court and discussing them with the IRS. The 2020 notice also challenges a deduction associated with an estimated $440M cash tax benefit in another tax year. Malaysia assessed $413M of tax for 2023 relating to an intercompany affiliate sale; Abbott appealed after the Penang High Court upheld the assessment in October 2025. 9M 2026 taxes included $540M of expense from a deferred tax asset recognized as a prior-year non-cash benefit and $95M of net expense from resolutions of prior-year tax positions.

In October 2026, Abbott announced plans to separate Nutrition into an independent publicly traded company through a distribution to Abbott shareholders, targeted by end-2027 subject to regulatory, registration and board approvals. 2026 product developments included FDA approvals for Libre Duo and TactiFlex Duo, CE Mark for Libre Duo and Amulet 360, and the launch of SimpleScreen CRC, a blood-based colorectal cancer screening test. Abbott also launched U.S. Similac 360 Total Care Made With Whole Milk. The company noted that uncertainty around healthcare-product availability, delivery and payment could adversely affect Abbott or the broader industry.

Abbott’s CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2026. During the quarter, no changes in internal control over financial reporting materially affected, or were reasonably likely to materially affect, those controls.