Abbott Laboratories delivered its strongest underlying growth of the year in the third quarter and simultaneously lowered its full-year revenue bar. Adjusted EPS of $1.42 missed the $1.43 consensus by 1.4% and fell short of the $1.44 Earnings Whisper. Revenue of $13.013 billion edged past the $12.97 billion consensus by 0.3%. Earnings grew 9.2% year over year, up from 6.3% adjusted growth over the first nine months. Reported revenue rose 14.5%, though much of that came from the March acquisition of Exact Sciences. The more telling figure is comparable sales growth of 7.0%, up from 4.8% in Q2 and 3.7% in Q1. That is a clear acceleration. Management nonetheless cut full-year comparable sales guidance to about 6% from the 6.5%-7.5% range it had reaffirmed twice. That is the central tension of the quarter.
The quality of the earnings line deserves scrutiny in both directions. On a GAAP basis, EPS fell to $0.53 from $0.94. The drop reflects intangible amortization that doubled to $841 million after the Exact deal and roughly $670 million in legal settlements, mainly resolving the Gill case and NEC claims tied to about 2,000 additional infants. Net interest expense also jumped to $297 million from $44 million, the cost of financing the acquisition. On an adjusted basis, gross margin expanded 140 basis points to 57.2% and operating margin rose 40 basis points to 23.4%. A lower adjusted tax rate, 15.2% versus 16.5%, also helped the bottom line. Exact itself is pulling its weight: management said its operating margin is now in the high teens, up from roughly breakeven before the deal.
Beneath the headline, growth leadership is shifting. Electrophysiology was the standout, up 15.5% on a comparable basis. U.S. EP grew in the high teens, and above 20% excluding LAA devices, after the Volt pulsed field ablation system moved to full U.S. release. Europe EP grew 25%. Rhythm Management rose 10%. Nutrition, which declined over the nine-month period, grew 4.9% on a comparable basis, with U.S. pediatric up 11% on WIC contract wins. The weak spot is Diabetes Care, long the franchise investors lean on most. CGM growth slowed to about 8% from 9.5% in Q2. Management cut its CGM outlook to low-to-mid single digits for the next few quarters, citing international pricing pressure and slower Type 2 penetration without CMS reimbursement for non-insulin patients. Cancer Diagnostics grew 13.8%, below the mid-teens deal-model expectation, partly because a July cybersecurity event cost about a point of growth.
The forward picture is a mix of real catalysts and diminished ambition. The planned tax-free spin-off of the roughly $8.5 billion Nutrition business by the end of 2027 is the structural headline. Management expects it to add 50-100 basis points to the remaining company's sales growth, more than 200 basis points to gross margin and about 100 basis points to operating margin. The product calendar is also full:
- TactiFlex Duo won FDA approval early, with a broad U.S. launch in Q4.
- Libre Duo, a dual glucose-ketone sensor, launches in the U.S. in December.
- Amulet 360 received CE Mark.
- A favorable U.S. formulary change for Libre takes effect January 1.
- Coronary IVL approval is expected in the first half of 2027.
Bears still have legitimate ammunition. Management plans to guide 2027 sales roughly in line with 2026, near 6%, a step back from the 7% sustainable target it framed in Q2. Order pauses ahead of Amulet 360 trimmed the Q4 EP growth expectation to about 20% from 25%. How NEC liability will be split between Abbott and the future Nutrition company is unresolved. The CEO conceded the top-line record this year has been "inconsistent." Adjusted EPS guidance was tightened to $5.50-$5.55, keeping the midpoint, with Q4 set at $1.62-$1.67. Profit commitments are holding even as revenue expectations slip.
The market setup is more complicated than the small miss implies. Investor sentiment swung sharply into the report, moving from -0.35 after the July release to +0.31, a substantial shift. Shares had gained 7.5% from the post-July open to $102.45 heading into the release. Even so, the stock sat essentially on its 200-day moving average and 12.7% below its August 24 inter-earnings high of $117.34. Much of a late-summer rally has been surrendered. Sequential growth and momentum trend readings are positive, while AVWAP remains negative, a fair reflection of a stock that has recovered from its lows but not regained its highs. Improved sentiment raises the bar for a report that paired acceleration with a guidance cut.
The bottom line is that Abbott's quarter showed a business regaining operating momentum. Comparable growth accelerated for a second straight quarter, margins expanded, EP is surging and the Nutrition spin offers a credible path to a higher-margin company. But the slight EPS miss, the lower revenue guide, a weaker CGM outlook and a conservative 2027 framing mean investors are being asked to trust a pipeline-driven story while near-term growth targets come down.