Financial Data and Key Metrics Changes - In Q4 2025, sales increased by 3.8% excluding COVID testing sales, with adjusted earnings per share (EPS) of $1.50 reflecting a growth of 12% compared to the prior year [18] - Adjusted gross margin was 57.1% of sales, an increase of 20 basis points year-over-year, while adjusted operating margin rose to 25.8%, reflecting an increase of 150 basis points [18] - The company forecasts adjusted EPS for 2026 to be in the range of $5.55-$5.80, indicating a 10% growth at the midpoint [19] Business Line Data and Key Metrics Changes - Nutrition sales declined in Q4, impacted by market share loss and increased manufacturing costs, with a focus on reigniting volume growth through price and promotion initiatives [9][10] - Diagnostics sales decreased by 3.5% due to a decline in COVID testing, while Core Lab Diagnostics grew by 3.5%, achieving accelerating growth [11] - EPD (Established Pharmaceuticals Division) saw a 7% increase in sales, with double-digit growth in India and several Latin American and Middle Eastern countries [12] - Medical devices sales grew by 10.5%, driven by a 12% increase in continuous glucose monitors and strong performance in electrophysiology and structural heart segments [12][14] Market Data and Key Metrics Changes - The U.S. pediatric nutrition business faced challenges due to market share loss and increased price sensitivity among consumers [9][10] - Core Lab Diagnostics growth was 7% excluding China, reflecting durable demand globally [11] - EPD's growth was well-balanced across markets, with significant contributions from emerging markets [12] Company Strategy and Development Direction - The company aims to transition back to a more balanced growth profile, focusing on volume growth alongside price increases [10] - The acquisition of Exact Sciences is expected to enhance Abbott's position in the cancer diagnostics market, adding a high-growth business to its portfolio [8] - The company plans to launch at least eight new products in the nutrition segment over the next 12 months to support growth [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the nutrition business but expressed confidence in the ability to reignite volume growth and return to positive growth in the second half of 2026 [27] - The company expects continued momentum in most business segments, with a focus on innovation and operational excellence driving growth [8][29] - Management highlighted the importance of addressing price sensitivity and the need for a sustainable growth strategy in the nutrition segment [25][27] Other Important Information - The company anticipates a favorable impact from foreign exchange on full-year reported sales, estimated at around 1% [19] - The adjusted tax rate is forecasted to be in the range of 15%-16% for the year [19] Q&A Session Summary Question: Concerns about revenue growth guidance - Management acknowledged a slight reduction in top-line guidance primarily due to challenges in the nutrition business but maintained EPS guidance in line with consensus [23][24] Question: Insights on the EP product portfolio - Management emphasized the successful launch of the Vault PFA catheter and the strategic positioning of Abbott's EP portfolio, expecting to grow in line with market trends [34][39] Question: Guidance considerations and risk adjustments - Management explained that the guidance reflects a mix of stable growth in core segments and anticipated recovery in diagnostics, with a focus on maintaining high single-digit growth [42][45] Question: Continuous glucose monitor (CGM) growth expectations - Management projected continued strong growth in CGM sales, driven by market expansion opportunities and new product launches [50][56] Question: Capital allocation and M&A strategy - Management indicated a focus on integrating Exact Sciences post-acquisition, with potential for smaller tuck-in acquisitions in the future [69][70]

Financial Performance - Net sales decreased by 15.9% year-over-year to $135.6 million in 1Q25, primarily due to customer channel inventory destocking[5, 17, 20] - Adjusted EBITDA decreased year-over-year to $12.2 million, with an Adjusted EBITDA margin of 9.0%, a 140bps increase compared to 4Q24[8, 10] - Free Cash Flow was $5.4 million in 1Q25, supported by working capital efficiency initiatives[8, 10] - Adjusted Diluted EPS was $0.04 in 1Q25[8, 10] Capital Allocation and Balance Sheet - The company ended 1Q25 with a net leverage of 1.4x, down from 2.0x at the end of 1Q24[8] - $1.7 million of shares were repurchased during the quarter[8] - Total cash and available liquidity stood at $203 million[30] Outlook and Guidance - The company maintained FY25 guidance, supported by strong year-to-date execution and stronger than expected demand within the Military and Other end markets[7] - Revenue for 2025 is projected to be between $560 million and $590 million, representing a decrease of (4%) to 1% year-over-year[32] - Adjusted EBITDA for 2025 is projected to be between $60 million and $66 million, representing a decrease of (7%) to 2% year-over-year[32] - Free cash flow for 2025 is projected to be between $43 million and $50 million, representing a decrease of (45%) to (36%) year-over-year[32] End-Market Outlook - The company anticipates subdued customer demand in the first half of 2025, with gradual improvement in the second half as channel inventory levels normalize[12] - The company expects year-over-year net sales changes in 2025 for the following end markets: Commercial Vehicle: (1%) – (5%), Construction & Access: 0% – (5%), Powersports: (5%) – (15%), Agriculture: (22%) – (28%), Military: 10% – 15%, Other: 18% – 20%[13, 32]