Financial Data and Key Metrics Changes - The company reported organic sales growth of 7.5%, excluding COVID test sales, with earnings per share rising to $1.3, reflecting high single-digit growth compared to last year [6][7][18] - Adjusted gross margin was 55.8% of sales, reflecting a decrease due to tariffs, while adjusted operating margin increased by 40 basis points to 23% [19][18] Business Line Data and Key Metrics Changes - Nutrition sales increased by 4%, driven by adult nutrition, particularly in international markets with a 10% growth [8][9] - Diagnostics experienced modest sales growth, with core lab diagnostics growing 7% excluding China, while point of care diagnostics grew by 8% [10][11] - Established Pharmaceuticals (EPD) sales increased by 7%, led by double-digit growth in key markets [12] - Medical Devices sales grew by 12.5%, with significant contributions from diabetes care and electrophysiology [12][16] Market Data and Key Metrics Changes - International markets for adult nutrition saw a 10% growth, while the U.S. diagnostics market grew by 10% [9][59] - The European diagnostics market grew by 6-7%, and Latin America experienced mid-teens growth [61] Company Strategy and Development Direction - The company aims to sustain high single-digit organic sales growth and double-digit EPS growth, focusing on new product launches and addressing headwinds in diagnostics [24][27] - Investments in clinical trials and product launches are expected to drive future growth, with a commitment to maintaining a robust pipeline [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting consensus estimates for 2026, citing underlying momentum in the current portfolio and easing headwinds from diagnostics [22][24] - The company anticipates a recovery in the diagnostics business, particularly outside of China, with expectations for mid to high single-digit growth next year [58][62] Other Important Information - The company is advancing its biosimilar strategy and has made progress in regulatory approvals for several products [12] - The management highlighted the importance of maintaining a full portfolio to drive growth across various segments [50] Q&A Session Summary Question: Thoughts on 2026 sales and EPS consensus - Management is comfortable with the consensus estimates for 2026, expecting to deliver similar growth rates as in 2025 [22][24] Question: U.S. diabetes growth dynamics - U.S. diabetes care grew by 19%, with expectations for continued strong growth driven by new product launches [32][35] Question: Drivers of diagnostics business recovery - Management noted that while challenges remain in China, growth outside of China is accelerating, with expectations for a recovery in the diagnostics business [58][62] Question: Structural heart market outlook - Management acknowledged the importance of left atrial appendage closure and is optimistic about future growth in this area [96][100] Question: Barriers to CGM penetration in the U.S. - Management identified the need for increased awareness and coverage among primary care physicians as barriers to higher CGM penetration [101][106]

Core Viewpoint - The healthcare sector is positioned as a strong long-term investment opportunity, with a focus on companies that have shown adaptability and are well-prepared for future challenges [2]. Group 1: Abbott Laboratories - Abbott Laboratories, founded in 1888, has a market capitalization of $240 billion and offers diverse healthcare products across multiple sectors [4]. - The company is a leader in medical devices, diagnostics, nutritional products, and established pharmaceuticals, with notable products like the MitraClip and FreeStyle Libre [5][6]. - Abbott anticipates an 8% year-over-year revenue growth in 2025 and continues to innovate, recently receiving the European CE Mark for the Volt PFA System [7][8]. - Abbott has a strong dividend history, having increased its dividend for 53 consecutive years [8]. Group 2: AbbVie - AbbVie, spun off from Abbott in 2013, has a market capitalization of approximately $328 billion and generated $56.3 billion in sales last year [9][10]. - The company has successfully navigated the loss of U.S. exclusivity for its top product, Humira, by investing in R&D and acquisitions, leading to a robust product pipeline [11]. - AbbVie’s successors to Humira, Rinvoq and Skyrizi, are projected to generate combined sales of $31 billion by 2027, surpassing Humira's peak sales [12]. - AbbVie has increased its dividend by a cumulative 310% since its spin-off, with a forward dividend yield of 3.51% [12]. - The stock is considered relatively inexpensive, trading at 15.2 times forward earnings, with growth potential from new products [13].

Industry Overview - The American trade structure is undergoing a significant transformation due to the Trump administration's new tariff policy, which has complex implications for the healthcare industry [1][3] - Pharmaceuticals are exempt from the new tariffs, protecting over $200 billion in annual U.S. pharmaceutical imports from immediate cost increases, although concerns remain about potential future tariffs on foreign-made drugs [3][4] - Medical devices and healthcare supplies are significantly affected by the tariffs, leading to warnings from industry associations about job losses, delayed innovation, and increased healthcare costs [4] Economic Impact - The new tariffs introduce macroeconomic volatility, with Goldman Sachs raising the odds of a U.S. recession from 20% to 45% due to trade-related uncertainties [5] - Retaliation from trade partners, particularly the EU and China, could further disrupt access to essential materials and technologies [5] Investment Opportunities - In the current volatile environment, investors are advised to focus on large-cap U.S.-based healthcare stocks, which are better positioned to absorb market shocks and maintain profitability [2][6] - Universal Health Services (UHS) is expected to see net revenue growth of 7.6% year-over-year in 2025, driven by expansions in licensed bed capacity and positive impacts from Medicaid programs [7] - BioMarin Pharmaceutical is benefiting from strong demand for its dwarfism drug Voxzogo and has promising developments in gene therapy, with a projected earnings growth of 22.2% for 2025 [9][11] - Abbott is unlocking new growth opportunities through its product pipeline, with a focus on next-generation diagnostics and biosimilars, expecting earnings growth of 10.3% in 2025 [12][13]