Abbott lowers 2026 sales growth forecast and plans to spin off nutrition business

Added CEO comments in paragraphs 4 and 7, and added a chart in paragraph 9

Padmanabhan Ananthan/Christy Santhosh

Reuters, October 21 - Abbott Laboratories (ABT.N) on Wednesday cut its 2026 sales growth forecast and said it plans to spin off its nutrition business into a publicly traded company, as the firm faces costly lawsuits over its infant formula products.

The spinoff will separate a troubled business division that includes brands such as Similac infant formula and Ensure nutrition drinks, which generated sales of over $8 billion last year.

Abbott joins the ranks of peers such as Johnson & Johnson (JNJ.N) and Medtronic (MDT.N), which in recent years have also announced plans to spin off businesses, as major healthcare companies reshape their portfolios to focus more on high-growth areas.

The nutrition division lost a major U.S. government supply contract last year and has also faced rising production costs, prompting price increases and hitting demand.

Since Abbott's infant formula plant in Sturgis, Michigan, halted production in 2022 due to a recall, its formula business has suffered a string of setbacks, compounding a nationwide shortage. The company also faces lawsuits (link) alleging its specialty formula for premature infants may cause deadly intestinal disease.

CEO Robert Ford struck an upbeat tone on the earnings call, saying ongoing legal disputes were unlikely to delay the spin-off process. “From a strategic perspective, many segments in the nutrition business over the next decade… will see strong differentiation and rapid growth.”

The company said the spinoff is expected to be completed in 2027.

Abbott's shares fell 4% in early trading. JPMorgan analyst Robbie Marcus said the dip likely reflects “some of the value creation in nutrition being offset by more muted fundamentals.”

https://www.reuters.com/graphics/ABBOTT-RESULTS/lbpgxyondvq/chart.png

Lowered forecast weighs on 2027 performance

Abbott now expects 2026 sales growth of about 6%, down from its previous outlook of 6.5% to 7.5%. The company narrowed its full-year adjusted earnings per share guidance from $5.45 to $5.60 to a range of $5.50 to $5.55.

RBC Capital Markets analyst O. Kendall said the adjustment was significant enough to impact the company's outlook into 2027.

Third-quarter adjusted earnings per share were $1.42, in line with expectations. Revenue came in at $13.01 billion. According to data compiled by London Stock Exchange Group (LSEG), analysts had estimated $13 billion on average.

(To make news more accessible for non-English speakers, Reuters has automated translation of its reports into several other languages. Automated translation may contain errors or lack the context required, and Reuters does not guarantee the accuracy of these translations. Automated translations are offered for reader convenience only. Reuters is not responsible for any damage or losses arising from the use of this service.)