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Abbott Laboratories (NYSE:ABT) reported solid first-quarter 2025 results on April 16, with organic sales growth of 6.9% and double-digit earnings growth, despite emerging macroeconomic challenges. The healthcare giant’s stock rose 5.4% following the announcement, reflecting investor confidence in the company’s ability to navigate potential tariff impacts while maintaining its growth trajectory.
Quarterly Performance Highlights
Abbott reported worldwide sales of $10.4 billion for Q1 2025, representing organic growth of 6.9%, or 8.3% when excluding COVID testing sales. Adjusted diluted earnings per share reached $1.09, exceeding analyst expectations of $1.07 and marking an 11% year-over-year increase.
The company’s diversified business model continued to demonstrate strength across multiple segments. Medical (TASE:BLWV) Devices led growth with sales of $4.9 billion, up 12.5% organically. Diagnostics and Nutrition each contributed $2.1 billion, while Established Pharmaceuticals added $1.3 billion with 8% growth.
Notably, Abbott’s gross margin expanded by 140 basis points to 57.1%, while operating margin increased by 130 basis points to 21%, reflecting the company’s focus on operational efficiency and product mix optimization.
Strategic Initiatives
Abbott highlighted several key strategic initiatives during its presentation, including significant investments in manufacturing and innovation. The company is investing $500 million in manufacturing and R&D facilities in Illinois and Texas, with these investments projected to go live by the end of 2025.
"We’ve always had a view with our manufacturing framework... align the manufacturing as close as possible to the customer and then have an appropriate amount of redundancy," said CEO Robert Ford during the earnings call, emphasizing how this long-standing strategy positions Abbott well to mitigate potential tariff impacts.
In the cardiovascular space, Abbott announced it had obtained an earlier-than-expected CE Mark for its Volt™ Pulsed Field Ablation (PFA) System to treat patients with atrial fibrillation. Commercial cases are already underway in the EU, with plans to expand use in European markets during the second half of 2025.
"The initial feedback has been very, very positive," Ford noted regarding the Volt system. "We continue to be the market leader in the mapping of PFA cases, at least that’s what we saw in Q1."
The company also initiated its U.S. pivotal trial, TECTONIC, to evaluate its investigational Coronary Intravascular Lithotripsy (IVL) System, designed to treat severe calcification in coronary arteries prior to stent implantation. This represents Abbott’s entry into what management described as a "$1 billion opportunity" in the coronary intervention market.
Forward-Looking Statements
Despite emerging concerns about potential tariff impacts, Abbott reaffirmed its full-year 2025 guidance, projecting adjusted diluted EPS of $5.05 to $5.25 and organic sales growth of 7.5-8.5%.
Management addressed the tariff issue directly during the earnings call, with Ford estimating a "few hundred million dollars" impact in 2025, representing a half-year effect primarily in the third and fourth quarters. However, he emphasized Abbott’s ability to mitigate these challenges through its global manufacturing network of 90 sites.
"Whatever comes, it stays and it stays for a while. Look at the tariffs that went into place in 2017, they’re still there," Ford commented, highlighting the company’s focus on developing sustainable, long-term mitigation strategies rather than short-term fixes.
Abbott expects stronger performance in the second half of 2025, driven by new product launches gaining momentum and easier year-over-year comparisons, particularly in diagnostics and nutrition segments.
Competitive Industry Position
Abbott continues to strengthen its position across multiple high-growth markets. In diabetes care, sales of continuous glucose monitors reached $1.7 billion in the quarter, growing more than 20% globally and 30% in the United States, reinforcing the company’s leadership in this space.
The structural heart business delivered impressive 15% growth, driven by the company’s transition from being "a single product company in MitraClip to a full portfolio product," according to Ford. Strong performance was noted in Navitor (TAVR) with market share gains in Europe, and TriClip, which management indicated is "now clearly the preferred option" for tricuspid valve repair.
In electrophysiology, Abbott achieved 10% growth even before the introduction of its Volt PFA system, positioning the company well in the competitive atrial fibrillation treatment market. Management highlighted that Abbott was "the second fastest growing competitor" in this space last year despite intense competition.
The rhythm management business also showed strength with approximately 7% growth, driven by the company’s leadless pacemaker, Averi. "Rarely do you have an opportunity to completely change the standard of care," Ford noted, predicting that "the majority of this market will be leadless" within the next five years.
Challenges and Outlook
Despite the overall strong performance, Abbott faces some headwinds. The diagnostics segment declined 5% due to lower COVID-19 testing sales and the impact of volume-based procurement programs in China. Excluding China, Core Laboratory Diagnostics grew 6.5%, highlighting the geographic-specific nature of this challenge.
Management also addressed potential risks from tariffs, particularly between the U.S. and China, but expressed confidence in the company’s ability to navigate these challenges through its diversified manufacturing footprint and strategic flexibility.
Looking ahead, Abbott appears well-positioned to maintain its growth trajectory through continued innovation, operational efficiency, and strategic investments. The company’s diversified business model and global manufacturing network provide significant advantages in navigating an increasingly complex macroeconomic environment.
As Ford summarized: "Our job here is to translate all that complexity and all those moving pieces into sustained and reliable growth and performance, which was what we’ve been doing and what we’re going to continue to do."
Full presentation:
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