01—Abstract
Summary
Summary of the 8-K filed April 16, 2025. Cited figures are marked; the original filing is the authoritative source.
Abbott Laboratories reported first-quarter 2025 results that beat its own growth profile and reaffirmed all full-year 2025 guidance.
Net sales rose 4.0% reported to $10.358 billiona, with organic growth of 6.9% (8.3% excluding COVID-19 testing sales). GAAP diluted EPS was $0.76, up 8.6%, and adjusted diluted EPS was $1.09, up 11.2%. Medical Devices was the primary engine, growing 9.9% reported and 12.6% organically, led by Diabetes Care (continuous glucose monitors up 18.3% reported to $1.7 billion), Structural Heart, Heart Failure and Electrophysiology.
Operating earnings rose 22.1% to $1.693 billionb, and adjusted gross and operating margins expanded by 140 and 130 basis points, respectively. The quarter had two offsetting pressures. Diagnostics fell 7.2% reported and 4.9% organically, reflecting a sharp drop in COVID-19 testing sales (to $84 million from $204 million) and China volume-based procurement; excluding COVID testing, Diagnostics grew 0.5%.
Reported GAAP results were also affected by an approximately $200 millionc tax charge tied to adjustments to a previously recognized significant non-cash deferred tax benefit, which lifted the GAAP effective tax rate to 25.5% from 14.7% a year earlier. Management kept full-year guidance unchanged: organic sales growth of 7.5% to 8.5%, adjusted operating margin of 23.5% to 24.0%, and adjusted diluted EPS of $5.05 to $5.25, with second-quarter adjusted EPS guided to $1.23 to $1.27. The board also declared the 405th consecutive quarterly dividend of $0.59 per share, extending a 53-year streak of annual increases.
02—Key points
Key Highlights
- Sales of $10.358 billion grew 4.0% reported and 6.9% organically; excluding COVID-19 testing, organic growth was 8.3%.
- GAAP diluted EPS of $0.76 (+8.6%) and adjusted diluted EPS of $1.09 (+11.2%); specified items reduced EPS by $0.33, of which intangible amortization was the largest component.
- Medical Devices grew 9.9% reported and 12.6% organically to $4.895 billion, with Diabetes Care up 16.5% and continuous glucose monitors up 18.3% reported.
- Diagnostics declined 7.2% reported and 4.9% organically, driven by lower COVID-19 testing ($84 million vs. $204 million) and China volume-based procurement pressure.
- Adjusted gross margin of 57.1% (up 140 bps) and adjusted operating margin of 21.0% (up 130 bps) show improving underlying profitability, while GAAP margins were 52.8% and 16.3%.
- GAAP tax expense included roughly $200 million from adjustments to a previously recognized non-cash deferred tax benefit, a one-time item that weighs on GAAP EPS (roughly $0.11 per share on about 1.747 billion diluted shares, by our estimate).
- Full-year 2025 guidance was reaffirmed (organic sales growth 7.5% to 8.5%, adjusted EPS $5.05 to $5.25), and the $0.59 quarterly dividend was declared and marks the 405th consecutive quarterly payout.
03—Questions
Frequently Asked Questions
Did Abbott change its 2025 guidance in the first-quarter report?
No. Abbott reaffirmed all previously provided full-year 2025 guidance: organic sales growth of 7.5% to 8.5%, adjusted operating margin of 23.5% to 24.0%, and adjusted diluted EPS of $5.05 to $5.25. It also guided second-quarter 2025 adjusted diluted EPS to $1.23 to $1.27. Abbott did not provide GAAP guidance equivalents, citing the difficulty of forecasting items such as restructuring, impairments, acquisition costs and foreign exchange.
Why is there a large gap between GAAP and adjusted EPS?
Adjusted EPS excludes about $594 million in after-tax specified items, or $0.33 per share. The largest component is intangible amortization of $420 million pre-tax, followed by restructuring and cost reduction costs, acquisition-related expenses, and investment impairments. Abbott argues these exclusions give investors better visibility into ongoing operations, but investors should weigh the recurring nature of some items, such as amortization and restructuring, when comparing the two measures.
Why did the GAAP tax rate jump this quarter?
The GAAP effective tax rate was 25.5% versus 14.7% in the prior-year quarter. The increase is largely attributable to approximately $200 million of adjustments related to the prior recognition of a significant non-cash deferred tax benefit. Excluding specified items, the adjusted tax rate was 16.5% versus 15.0% a year earlier. The charge is non-cash, but it reduced GAAP net earnings and EPS in the quarter.
What is driving the weakness in Diagnostics, and is it temporary?
Diagnostics sales fell 7.2% reported, mainly because COVID-19 testing sales dropped to $84 million from $204 million and China volume-based procurement programs weighed on pricing and volume. Excluding COVID testing, Diagnostics grew 0.5%, and Core Laboratory Diagnostics grew 0.9% organically. The filing does not quantify how long the China procurement pressure will last, so the recovery timeline is uncertain.
How strong is the Medical Devices growth story?
Medical Devices was the standout segment, with sales of $4.895 billion, up 9.9% reported and 12.6% organically. Diabetes Care (up 16.5% reported) and continuous glucose monitors (up 18.3% reported to $1.7 billion) were key contributors, along with Structural Heart (up 11.9%), Heart Failure (up 11.4%) and Electrophysiology (up 7.3%). Abbott also highlighted early commercial uptake of its Volt PFA System in the EU and the TriClip two-year data, which support the segment's pipeline.
04—Continue