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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 187 added, 202 removed, 341 unchanged (53% of the section changed)

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Financial Review

Abbott’s revenues are derived primarily from the sale of a broad line of health care products, which include medical devices, diagnostic testing products, nutritional products and branded generic pharmaceuticals.

Abbott’s revenues are derived primarily from the sale of a broad line of healthcare products, which include medical devices, diagnostic testing products, nutritional products and branded generic pharmaceuticals.

These products are sold under short-term receivable arrangements.

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Sales in international markets comprise 61 percent of consolidated net sales.

Abbott’s sales growth in 2024 was primarily driven by the Medical Devices, Established Pharmaceutical and Nutritional businesses.

The growth is the result of a productive research and development (R&D) pipeline and a combination of the introduction of new products and indication expansions across various businesses.

Sales growth was negatively impacted by continued year-over-year decline in COVID-19 testing-related sales, as the COVID-19 pandemic shifted to an endemic state.

In 2024, 2023 and 2022, Abbott’s COVID-19 testing related sales total $747 million, $1.6 billion and $8.4 billion, respectively.

Sales in emerging markets, which represent approximately 37 percent of total company sales, increased 8.2 percent in 2024 and 5.4 percent in 2023, excluding the impact of foreign exchange.

(Emerging markets include all countries, except the United States, Japan, Canada, Australia, New Zealand, the United Kingdom and Western European countries.)

Abbott’s operating margin profile increased in 2024 to 16.3 percent from 16.2 percent in 2023.

On November 19, 2025, Abbott entered into a definitive agreement to acquire Exact Sciences Corporation (Exact Sciences), which is expected to enable Abbott to enter the cancer diagnostics market.

The acquisition is subject to customary closing conditions, including the approval of Exact Sciences shareholders, and obtaining the required regulatory clearances.

Under the terms of the agreement, Abbott will pay $105 per common share in cash at the completion of the transaction, representing a total equity value of approximately $21 billion and an estimated enterprise value of $23 billion.

Abbott's financing contemplates absorption of Exact Sciences' estimated $1.8 billion of net debt.

On November 19, 2025, Abbott obtained a commitment for a 364-day senior unsecured bridge term loan facility for an amount not to exceed $20.0 billion in conjunction with its pending acquisition of Exact Sciences.

While Abbott plans to fund this transaction with cash on hand and borrowings, the bridge facility will provide back-up financing.

Abbott’s sales growth in 2025 was primarily attributable to the performance of the Medical Devices and Established Pharmaceutical Products segments.

Results reflect continued progress across related research and development programs, including the contribution of new and recently introduced products and indication expansions.

Results in the Nutritional Products segment were flat, reflecting price increases and lower volumes, particularly in the United States (U.S.).

Sales also continued to be affected by the decline in COVID‑19 testing‑related sales in the Diagnostics segment.

In 2025, 2024, and 2023, Abbott’s COVID-19 testing-related sales totaled $297 million, $747 million, and $1.6 billion, respectively.

Sales in emerging markets, which represent 37 percent of total company sales, increased 5.1 percent in 2025 and 8.2 percent in 2024, excluding the impact of foreign exchange.

(Emerging markets include all countries, except the U.S., Japan, Canada, Australia, New Zealand, the United Kingdom, and Western European countries.)

Abbott’s operating margin profile increased in 2025 to 18.2 percent from 16.3 percent in 2024 and 16.2 percent in 2023.

The increase in 2025 reflects the favorable impact of margin improvement initiatives, partially offset by foreign exchange and inflation.

In 2022, operating margin as a percentage of sales was 19.2 percent.

The decrease in 2023 from 2022 reflects the unfavorable effects of lower COVID-19 testing-related sales, foreign exchange, and higher costs for various manufacturing inputs.

In 2023, these unfavorable effects were partially offset by the favorable impact of margin improvement initiatives.

With respect to the performance of each reportable segment over the last three years, sales in the Medical Devices segment, excluding the impact of foreign exchange, increased 11.9 percent in 2025 and 13.7 percent in 2024.

In Medical Devices, sales in 2024 and 2023 increased across all businesses, with double-digit growth in Diabetes Care, Structural Heart, Electrophysiology, and Heart Failure.

In 2023, Neuromodulation sales also increased double digits.

In Medical Devices, sales in 2025 and 2024 increased across all businesses, with double-digit growth in Diabetes Care, Heart Failure, Electrophysiology, and Structural Heart, and in 2025, Rhythm Management.

Growth was led by Diabetes Care where sales of Abbott's continuous glucose monitoring (CGM) systems continued to increase and totaled $7.6 billion in 2025 and $6.4 billion in 2024.

In 2025, key product approvals in the Medical Devices segment included:

Food and Drug Administration (FDA) clearance for two new over-the-counter CGM systems, Lingo ® and Libre Rio™, which are based on Abbott's FreeStyle Libre ® CGM technology,

• FDA approval of the Esprit™ below-the-knee (BTK) system, which is designed to keep arteries open in people living with peripheral artery disease and deliver a drug to support vessel healing prior to completely dissolving,

• FDA approval of TriClip ® , which provides a minimally invasive treatment option for patients with tricuspid regurgitation, or a leaky tricuspid heart valve,

• CE Mark for the Aveir ® dual chamber (DR) leadless pacemaker system, which is the world's first dual chamber leadless pacemaker system that treats people with abnormal or slow heart rhythms, and

• FDA clearance for Advisor ® HD Grid X Mapping Catheter, Sensor Enabled™, which will further support mapping of both pulsed field ablation (PFA) and radiofrequency (RF) ablation cases.

Food and Drug Administration (FDA) approval and CE Mark for the Volt™ Pulsed Field Ablation (PFA) System to treat patients with atrial fibrillation,

• FDA approval of the Tendyne™ transcatheter mitral valve replacement (TMVR) system to treat people with mitral valve disease,

• Regulatory approval in Japan for TriClip ® , a minimally invasive treatment option for patients with tricuspid regurgitation, or a leaky tricuspid heart valve,

• CE Mark for TactiFlex™ Duo Ablation Catheter, Sensor Enabled™, designed to deliver radiofrequency (RF) and PFA energy to treat patients battling atrial fibrillation, and

• CE Mark for an expanded indication for the Navitor ® transcatheter aortic valve implantation (TAVI) system to treat people with symptomatic, severe aortic stenosis who are at low or intermediate risk for open-heart surgery.

Operating earnings for the Medical Devices segment increased 17.2 percent in 2025 and 16.0 percent in 2024.

The operating margin profile for the Medical Devices segment increased from 30.0 percent in 2022 to 31.4 percent in 2023 and then increased to 32.4 percent in 2024.

The increase in 2024 from 2022 reflects the impact of higher sales volumes across the Medical Devices businesses.

Operating margin profile increased from 31.4 percent in 2023 to 32.4 percent in 2024 and to 33.7 percent in 2025 .

The increase in 2025 reflects the impact of higher sales volumes across the Medical Devices businesses.

In Abbott’s Diagnostics segment, sales decreased 4.5 percent in 2025 and 3.9 percent in 2024, excluding the impact of foreign exchange.

The 2024 and 2023 sales decreases were driven by continued lower demand for the company's portfolio of COVID-19 tests, partially offset by higher volume of routine diagnostic tests in the Rapid Diagnostics and Core Laboratory businesses and the continued deployment of Abbott's Alinity ® testing platform.

Abbott continues to build out its test menu for the Alinity testing platform.

In the first quarter of 2024, Abbott received FDA clearance of its i-STAT™ traumatic brain injury (TBI) cartridge for use with the i-STAT Alinity instrument, a whole blood point-of-care test to help assess mild TBI.

In the fourth quarter of 2023, Abbott received FDA approval of its new laboratory automation system, GLP systems Track™, to help laboratories optimize lab performance by consolidating multiple analytical instruments into a unified workflow.

The 2025 and 2024 sales decreases were driven by continued lower demand for the company's portfolio of COVID-19 tests and challenging market conditions in China, including the impact of volume-based procurement programs.

The sales decrease was partially offset by higher volume of routine diagnostic tests and the continued deployment of Abbott's Alinity ® testing platform and digital health solutions, as Abbott continues to expand its diagnostic test menus.

In 2025, operating earnings for the Diagnostics segment decreased 16.1 percent.

The operating margin profile decreased from 24.4 percent in 2023 to 19.5 percent in 2025 primarily due to lower demand for Abbott's COVID-19 tests.

In Abbott’s Nutritional Products segment, total pediatric nutrition sales, excluding the impact of foreign exchange, increased 3.7 percent in 2024 and 14.8 percent in 2023, which includes market share recovery in the U.S.

infant formula business following the voluntary recall of certain products in 2022, as discussed below, and the continued favorable impact of price increase initiatives.

Excluding the impact of foreign exchange, total adult nutrition sales increased 8.0 percent in 2024 and 8.8 percent in 2023, led by the continued growth of Abbott's Ensure ® and Glucerna ® products.

Adult Nutritionals sales were partially offset by the discontinuation of the ZonePerfect ® product line.

In Abbott’s Nutritional Products segment, total pediatric nutrition sales, excluding the impact of foreign exchange, decreased 0.7 percent in 2025, reflecting lower sales volumes in the U.S., partially offset by higher international sales and price increases.

In 2024, excluding the impact of foreign exchange, total pediatric nutrition sales increased 3.7 percent, which included market share recovery in the U.S.

infant formula business following the voluntary recall of certain products in 2022, and the favorable impact of price increases.

Excluding the impact of foreign exchange, total adult nutrition sales increased 2.7 percent in 2025 and 8.0 percent in 2024, reflecting growth in international markets and favorable impact of price increases.

These increases were partially offset by lower U.S.

sales, including the impact from the discontinuation of the ZonePerfect ® product line in 2024.

In 2025, operating earnings for the Nutritional Products segment increased 3.5 percent compared to 2024.

Operating margin profile for this segment increased from 9.5 percent in 2022 to 16.4 percent in 2023 and then increased to 17.9 percent in 2024.

The increase in 2024 reflects the favorable effects of higher sales, the favorable impact of price increases and a continued focus on margin improvement initiatives.

The increase in 2023 reflects the favorable effects of higher sales and a continued focus on margin improvement initiatives, partially offset by higher commodity and other costs.

In February 2022, Abbott’s U.S.

Pediatric Nutrition business was impacted by a voluntary recall of certain infant powder formula products manufactured at its facility in Sturgis, Michigan, at which time the company temporarily stopped operations at that facility.

Abbott took various actions to mitigate the impact of the recall on the supply of formula in the U.S.

Abbott resumed operations later in 2022 and made significant progress through 2023 to increase production of infant formula in the U.S and recover market share.

Beginning in the fourth quarter of 2023 and through 2024, Abbott has regained and maintained its market-leading position in the U.S., as measured on a volume basis.

The Established Pharmaceutical Products segment focuses on the sale of its products in emerging markets.

Excluding the impact of foreign exchange, Established Pharmaceutical sales increased 9.2 percent in 2024 and 10.9 percent in 2023.

The sales increase in 2024 was led by higher revenue in several countries in Latin America, Southeast Asia and the Middle East and across several therapeutic areas, including respiratory, gastroenterology, cardiometabolic and central nervous system/pain management.

The sales increase in 2023 reflects higher sales in several geographies including India, Vietnam, and Brazil.

In 2024, operating earnings for the Established Pharmaceutical Products segment increased 2.2 percent.

Operating margin profile increased from 21.4 percent in 2022 to 23.7 percent in 2024 primarily due to the impact of margin improvement initiatives and higher sales, partially offset by inflation on various product inputs.

With respect to Abbott’s financial position, at December 31, 2024 and 2023, Abbott’s cash and cash equivalents and short-term investments total approximately $8.0 billion and $7.3 billion, respectively.

Abbott’s long-term debt totals $14.1 billion and $14.7 billion at December 31, 2024 and 2023, respectively.

Operating margin profile for this segment increased from 16.4 percent in 2023 to 17.9 percent in 2024 and to 18.4 percent in 2025.

The increase in 2025 primarily reflects the favorable effect of margin improvement initiatives and price increases, partially offset by continued inflation in manufacturing and input costs and the impact of foreign exchange.

The increase in 2024 primarily reflected higher sales, the favorable impact of price increases, and a continued execution of margin improvement initiatives.

In Abbott's Established Pharmaceutical Products segment, excluding the impact of foreign exchange, sales increased 7.4 percent in 2025 and 9.2 percent in 2024.

Sales growth in both periods was broad-based across countries and was led by higher revenue across multiple therapeutic areas, including cardiometabolic, gastroenterology, and central nervous system/pain management.

In 2024, growth in this segment also reflected higher respiratory product sales.

In 2025, operating earnings increased 4.7 percent.

Operating margin profile decreased from 23.8 percent in 2023 to 23.3 percent in 2025, reflecting increased business costs and unfavorable foreign exchange, partially offset by higher volumes and favorable price adjustment initiatives.

With respect to Abbott’s financial position, as of December 31, 2025, and December 31, 2024, Abbott’s cash and cash equivalents and short-term investments totaled $8.9 billion and $8.0 billion, respectively.

Abbott’s long-term debt totaled $12.9 billion and $14.1 billion at December 31, 2025, and 2024, respectively.

Abbott declared dividends of $2.40 per share in 2025 and $2.24 per share in 2024 , an increase of 7.1 percent .

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In December 2024, Abbott increased the company’s quarterly dividend by 7.3 percent to $0.59 per share from $0.55 per share, effective with the dividend paid in February 2025.

On September 22, 2023, Abbott completed the acquisition of Bigfoot Biomedical, Inc.

(Bigfoot) , which furthers Abbott's efforts to develop connected solutions for making diabetes management more personal and precise.

On April 27, 2023, Abbott completed the acquisition of Cardiovascular Systems, Inc.

CSI's atherectomy system, which is used in treating peripheral and coronary artery disease, adds complementary technologies to Abbott's portfolio of vascular device offerings.

In 2025, Abbott will focus on continuing to invest in product development areas that provide the opportunity for strong sustainable growth over the next several years.

In its diagnostics business, Abbott's focus will include driving sales growth from its Alinity suite of diagnostics instruments along with GLP track integration and its portfolio of rapid diagnostic testing systems.

In the medical devices business, Abbott will focus on growing recently launched new products and expanding its market position across the various businesses.

In its nutritional business, Abbott will continue to focus on driving growth globally and further enhancing its portfolio with the introduction of science-based products and line extensions.

In the established pharmaceuticals business, Abbott will continue to focus on growing its business with the depth and breadth of its portfolio in emerging markets.

In 2026, Abbott will continue to invest in product development areas that provide the opportunity for strong sustainable growth over the next several years.

In the diagnostics businesses, Abbott will focus on driving sales growth from its Alinity suite of diagnostic instruments, including expanded menu offerings and GLP track integration, as well as its portfolio of rapid diagnostic testing systems, and growing digital health solutions.

In the medical devices businesses, Abbott will focus on growing recently launched products and expanding its market position across its various businesses.

In the nutrition businesses, Abbott will focus on introducing new products to adapt to evolving consumer preferences and driving growth globally.

In the established pharmaceuticals businesses, Abbott will continue to focus on growing the depth and breadth of its portfolio in emerging markets, including expanding its biosimilars portfolio.

Critical Accounting Policies

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Most of these rebates and allowances in 2025 are in the Nutritional Products and Diabetes Care businesses.

Abbott provides rebates to state agencies that administer the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), wholesalers, group purchasing organizations, and other government agencies and private entities.

Abbott provides rebates to state agencies, wholesalers, group purchasing organizations, and other government agencies and private entities.

Rebate amounts are usually based upon the volume of purchases using contractual or statutory prices for a product.

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Abbott regularly analyzes the historical rebate trends and makes adjustments to reserves for changes in trends and terms of rebate programs.

Rebates and chargebacks charged against gross sales in 2024, 2023, and 2022 amounted to $4.4 billion in 2024 and $3.9 billion in 2023 and 2022, or 18.6 percent, 17.4 percent, and 17.6 percent of gross sales, respectively, based on gross sales of approximately $23.5 billion, $22.7 billion, and $22.4 billion, respectively, subject to rebate.

Rebates and chargebacks charged against gross sales in 2025, 2024, and 2023 amounted to $4.8 billion in 2025, $4.4 billion in 2024, and $3.9 billion in 2023, or 21.1 percent, 18.6 percent, and 17.4 percent of gross sales, respectively, based on gross sales of approximately $22.5 billion, $23.5 billion, and $22.7 billion, respectively, subject to rebate.

A one-percentage point increase in the percentage of rebates to related gross sales would decrease net sales by approximately $225 million in 2025.

Abbott considers a one-percentage point increase to be a reasonably likely increase in the percentage of rebates to related gross sales.

Other allowances charged against gross sales were approximately $319 million, $263 million, and $280 million for cash discounts in 2024, 2023, and 2022, respectively, and $211 million, $169 million, and $379 million for returns in 2024, 2023, and 2022, respectively.

Abbott considers a one-percentage point increase to be a reasonably likely increase in the percentage of rebates related to gross sales.

Other allowances charged against gross sales were $316 million, $319 million, and $263 million for cash discounts in 2025, 2024, and 2023, respectively, and $236 million, $211 million, and $169 million for returns in 2025, 2024, and 2023, respectively.

Cash discounts are known within 15 to 30 days of sale and therefore can be reliably estimated.

Returns can be reliably estimated be cause Abbott’s historical returns are low, and because sales returns terms and other sales terms have remained relatively unchanged for several periods.

Management analyzes the adequacy of ending rebate accrual balances each quarter.

In the domestic nutritional business, management uses both internal and external data available to estimate the accruals.

In the WIC business, estimates are required for the amount of WIC sales within each state where Abbott holds the WIC contract.

The state where the sale is made, which is the determining factor for the applicable rebated price, is reliably determinable.

Rebated prices are based on contractually obligated agreements generally lasting a period of two to four years.

Except for a change in contract price or a transition period before or after a change in the supplier for the WIC business in a state, accruals are based on historical redemption rates and data from the U.S.

Department of Agriculture (USDA) and the states submitting rebate claims.

The USDA, which administers the WIC program, has been making its data available for many years.

Management also estimates the states' processing lag time based on sales and claims data.

Management has access to several large customers' inventory management data, which allows management to make reliable estimates of inventory in the retail distribution channel.

At December 31, 2024, Abbott had WIC business in 42 states.

Management analyzes the adequacy of ending rebate accrual balances each quarter using both internal and external data available to estimate the accruals.

Historically, adjustments to prior years’ rebate accruals have not been material to net earnings.

Abbott employs various techniques to verify the accuracy of claims submitted to it, and where possible, works with the organizations submitting claims to gain insight into changes that might affect the rebate amounts.

Abbott employs various techniques to verify the accuracy of submitted claims, and where possible, works with the organizations submitting claims to gain insight into changes that might affect the rebate amounts.

For government agency programs, the calculation of a rebate involves interpretations of relevant regulations, which are subject to challenge or change in interpretation.

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Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in its foreign entities is not practicable.

Pension and Post-Employment Benefits — Abbott offers pension benefits and post-employment health care to many of its employees.

Pension and Post-Employment Benefits — Abbott offers pension benefits and post-employment healthcare to many of its employees.

Abbott engages outside actuaries to assist in the determination of the obligations and costs under these programs.

Abbott must develop long-term assumptions, the most significant of which are the health care cost trend rates, discount rates and the expected return on plan assets.

Abbott must develop long-term assumptions, the most significant of which are the healthcare cost trend rates, discount rates, and the expected return on plan assets.

The discount rates used to measure liabilities were determined based on high-quality fixed income securities that match the duration of the expected retiree benefits.

The health care cost trend rates represent Abbott’s expected annual rates of change in the cost of health care benefits and are a forward projection of health care costs as of the measurement date.

The healthcare cost trend rates represent Abbott’s expected annual rates of change in the cost of healthcare benefits and are a forward projection of healthcare costs as of the measurement date.

A difference between the assumed rates and the actual rates, which will not be known for years, can be significant in relation to the obligations and the annual cost recorded for these programs.

net actuarial gains for these plans in 2024 reflect the impact of actual asset returns during the year in excess of expected returns and the impact of higher discount rates on the measurement of plan liabilities.

At December 31, 2024, pretax net actuarial losses and prior service costs and (credits) recognized in Accumulated other comprehensive income (loss) were net losses of $777 million for Abbott’s defined benefit plans and net losses of $21 million for Abbott’s medical and dental plans.

The net actuarial gains for Abbott's defined benefit plans in 2025 reflect the impact of actual asset returns during the year in excess of expected returns and the impact of higher discount rates on the measurement of plan liabilities.

The net actuarial losses for Abbott's medical and dental plans primarily reflect an increase in claims.

At December 31, 2025, pretax net actuarial gains (losses) and prior service costs and credits recognized in Accumulated other comprehensive income (loss) were net gains of $152 million for Abbott’s defined benefit plans and net losses of $189 million for Abbott’s medical and dental plans.

Actuarial losses and gains are amortized over the remaining service attribution periods of the employees under the corridor method, in accordance with the rules for accounting for post-employment benefits.

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Valuation of Intangible Assets — Abbott has acquired and continues to acquire significant intangible assets that Abbott records at fair value at the acquisition date.

Transactions involving the purchase or sale of intangible assets occur with some frequency between companies in the health care field and valuations are usually based on a discounted cash flow analysis.

Transactions involving the purchase or sale of intangible assets occur with some frequency between companies in the healthcare field and valuations are usually based on a discounted cash flow analysis.

The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, cost of capital, terminal values, and market participants.

Each of these factors can significantly affect the value of the intangible asset.

Abbott engages independent valuation experts who review Abbott’s critical assumptions and calculations for acquisitions of significant intangibles.

Abbott engages independent valuation experts who review Abbott’s critical assumptions and calculations for acquisitions of significant intangible assets.

Abbott reviews definite-lived intangible assets for impairment each quarter.

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Where cash flows cannot be identified for an individual asset, the review is applied at the lowest group level for which cash flows are identifiable.

Goodwill and indefinite-lived intangible assets, which relate to in-process research and development acquired in a business combination, are reviewed for impairment annually or when an event that could result in an impairment occurs.

At December 31, 2024, goodwill amounted to $23.1 billion and net intangibles amounted to $6.6 billion .

Amortization expense for intangible assets amounted to $1.9 billion in 2024 and $2.0 billion per year in 2023 and 2022 .

Goodwill and indefinite-lived intangible assets, which relate to in-process research and development (IPR&D) acquired in a business combination or consolidated variable interest entities, are reviewed for impairment annually or when an event that could result in an impairment occurs.

At December 31, 2025, goodwill amounted to $24.0 billion and net intangible assets amounted to $5.5 billion .

Amortization expense for intangible assets amounted to $1.7 billion in 2025, $1.9 billion in 2024, and $2.0 billion in 2023 .

There was no reduction of goodwill relating to impairments in 2025 , 2024 , and 2023 .

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Abbott estimates the range of possible loss to be from approximately $170 million to $180 million for its legal proceedings and environmental exposures.

Accruals of approximately $30 million have been recorded at December 31, 2024 for these proceedings and exposures.

The recorded accruals balance at December 31, 2025, for these proceedings and exposures were approximately $175 million and included $165 million for legal reserves related to a negotiated settlement.

These accruals represent management’s best estimate of probable loss, as defined by FASB ASC No.

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5.6 1.9 3.7 —

(14.8) 1.1 (15.9) —

Total International

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12.4 1.4 12.3 (1.3)

The increase in total net sales in 2025, excluding the impact of foreign exchange, primarily reflects higher sales in the Medical Devices and Established Pharmaceutical Products segments.

Nutritional Products segment sales for the year remained relatively unchanged, reflecting price increases and lower volumes.

Diagnostic Products segment sales continued to be impacted by the decline in COVID-19 testing-related sales and challenging market conditions in China.

Abbott’s COVID-19 testing-related sales totaled $297 million in 2025, $747 million in 2024 and $1.6 billion in 2023.

Abbott’s net sales in 2025 were not significantly impacted by changes in foreign exchange rates as the relatively stronger U.S.

dollar at the beginning of the year weakened later in the year, resulting in a 0.2 percent favorable impact on total international sales and total sales.

The increase in total net sales in 2024, excluding the impact of foreign exchange, primarily reflects higher sales in the Medical Devices, Established Pharmaceutical Products, and Nutritional Products segments, partially offset by a decrease in demand for Abbott’s rapid diagnostic tests to detect COVID-19.

Abbott’s COVID-19 testing-related sales totaled $747 million in 2024, $1.6 billion in 2023 and $8.4 billion in 2022.

Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 7.0 percent in 2024.

Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 9.6 percent.

Abbott’s net sales in 2024 were unfavorably impacted by changes in foreign exchange rates as the relatively stronger U.S.

dollar decreased total international sales by 4.2 percent and total sales by 2.6 percent.

The decrease in total net sales in 2023 reflects the decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19, partially offset by higher sales in the Medical Devices, Established Pharmaceutical Products and Nutritional Products segments.

Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 9.2 percent in 2023.

Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 11.7 percent.

Abbott’s net sales in 2023 were unfavorably impacted by changes in foreign exchange rates as the relatively stronger U.S.

dollar decreased total international sales by 3.5 percent and total sales by 2.0 percent.

The table below provides detail by sales category for the years ended December 31.

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Key Emerging Markets $ 4,167 $ 3,858 8.0 % (1.5) % 9.5 %

Other 1,336 1,259 6.1 (2.3) 8.4

Other Emerging Markets 1,369 1,336 2.5 1.1 1.4

Nutritional Products —

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Key Emerging Markets $ 3,858 $ 3,807 1.3 % (8.2) % 9.5 %

Other 1,259 1,146 9.8 (3.0) 12.8

Other Emerging Markets 1,336 1,259 6.1 (2.3) 8.4

Nutritional Products —

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The Acelis Connected Health business was internally transferred from Diagnostic Products to Medical Devices on January 1, 2023.

As a result, $115 million of sales in 2022 were moved from Diagnostic Products to Medical Devices.

In order to compute results excluding the impact of exchange rates, current year U.S.

To compute results excluding the impact of exchange rates, current year U.S.

dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

Established Pharmaceutical Products sales increased 9.2 percent in 2024 and 10.9 percent in 2023, excluding the unfavorable impact of foreign exchange.

Excluding the effect of foreign exchange, sales in Key Emerging Markets for Established Pharmaceutical Products increased 9.5 percent in 2024 and 10.3 percent in 2023, led by higher revenue in several countries and across several therapeutic areas, including respiratory, gastroenterology, cardiometabolic and central nervous system/pain management.

Established Pharmaceutical Products segment sales increased 7.4 percent in 2025 and 9.2 percent in 2024, excluding the unfavorable impact of foreign exchange.

Excluding the effect of foreign exchange, sales in Key Emerging Markets for Established Pharmaceutical Products increased 9.5 percent in 2025 and 2024, led by higher revenue in several countries and across multiple therapeutic areas, including cardiometabolic, gastroenterology, and central nervous system/pain management.

In 2024, growth in this segment also reflected higher respiratory product sales.

Other Emerging Markets, excluding the effect of foreign exchange, increased by 1.4 percent in 2025 and 8.4 percent in 2024.

Excluding the impact of foreign exchange, total Nutritional Products sales increased 5.9 percent in 2024 and 11.6 percent in 2023.

Pediatric Nutritional sales, the 11.7 percent increase in 2024 reflects infant formula market share gains and the continued favorable impact of price increases, partially offset by a decrease in PediaSure ® and Pedialyte ® product sales.

Growth in 2025 was unfavorably impacted by the absence of deferred gain amortization related to a prior transaction.

The deferred gain was fully amortized in 2024.

Excluding the impact of foreign exchange, total Nutritional Products segment sales increased 1.1 percent in 2025 and 5.9 percent in 2024.

Pediatric Nutritionals sales decreased 2.3 percent in 2025, primarily reflecting lower infant formula sales.

In 2024, U.S.

Pediatric Nutritional sales increased 26.6 percent as a result of market share recovery related to the voluntary recall of certain infant formula products in the first quarter of 2022, partially offset by a decrease in 2023 Pedialyte sales.

Excluding the effect of foreign exchange, the 4.3 percent decrease in International Pediatric Nutritional sales in 2024 reflects a decrease in sales in the Asia Pacific and Latin America regions, partially offset by increased sales in Canada and the Europe/Middle East regions.

Excluding the effect of foreign exchange, the 5.2 percent increase in International Pediatric Nutritional sales in 2023 reflects higher sales in Latin America and Canada, partially offset by the impact of exiting the pediatric nutrition business in China.

In 2024 and 2023, U.S.

and International Adult Nutritional sales increased due to higher Ensure ® and Glucerna ® product sales.

In 2024 and 2023, U.S.

Adult Nutritional sales increased 3.2 percent and 5.8 percent, respectively, and International Adult Nutritional sales, excluding the effect of foreign exchange, increased 10.5 percent and 10.4 percent, respectively.

Pediatric Nutritionals sales increased 11.7 percent, driven by infant formula market share gains and the favorable impact of price increases, partially offset by a decrease in PediaSure ® and Pedialyte ® product sales.

Excluding the effect of foreign exchange, International Pediatric Nutritionals sales increased 1.3 percent in 2025, driven primarily by higher PediaSure product sales.

Excluding the effect of foreign exchange, the 4.3 percent decrease in International Pediatric Nutritionals sales in 2024 reflects lower sales in the Asia Pacific and Latin America regions, partially offset by increased sales in Canada and the Europe/Middle East regions.

In 2025, U.S.

Adult Nutritional sales were partially offset by the discontinuation of the ZonePerfect ® product line.

Excluding the effect of foreign exchange, Diagnostic Products segment sales decreased 3.9 percent in 2024 and 38.2 percent in 2023, driven by lower demand for COVID-19 tests.

Adult Nutritionals sales decreased 2.2 percent, reflecting lower Ensure ® product sales and the discontinuation of the ZonePerfect product line in March 2024, partially offset by growth in Glucerna ® product sales.

International Adult Nutritionals sales, excluding the effect of foreign exchange, increased 5.1 percent due to growth of Ensure and Glucerna product sales.

In 2024, U.S.

and International Adult Nutritionals sales increased 3.2 percent and 10.5 percent, respectively, due to higher Ensure and Glucerna product sales.

In 2024, U.S.

Adult Nutritionals sales were partially offset by the discontinuation of the ZonePerfect product line.

Excluding the effect of foreign exchange, Diagnostic Products segment sales decreased 4.5 percent in 2025 and 3.9 percent in 2024 due to the continued decline in COVID-19 testing-related sales and challenging market conditions in China.

Rapid Diagnostics sales decreased 18.0 percent in 2025 and 17.8 percent in 2024, excluding the effect of foreign exchange.

The decrease reflects lower demand for COVID-19 tests.

Rapid Diagnostics COVID-19 testing-related sales were $725 million in 2024, $1.5 billion in 2023 and $7.9 billion in 2022.

Rapid Diagnostics sales, excluding COVID-19 testing-related sales, increased 4.8 percent in 2024 and remained unchanged in 2023.

In 2024, Rapid Diagnostics sales increased 6.0 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales, due to strong demand for respiratory disease tests used to diagnose influenza, strep throat and RSV.

In 2023, Rapid Diagnostics sales increased 1.3 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.

Growth in various Rapid Diagnostics products in 2023 was partially offset by the unfavorable effects of an early 2022 flu season and a later start of the 2023 flu season.

In Core Laboratory, sales increased 5.6 percent in 2024 and 8.4 percent in 2023, excluding the effect of foreign exchange.

The increase in 2024 was due to the continued deployment of Abbott's Alinity ® testing platform and higher volume of routine diagnostic testing performed in hospitals and other laboratories along with price increases, partially offset by lower sales in China.

The increase in 2023 was due to higher year-over-year volume of routine diagnostic testing performed in hospitals and other laboratories, partially offset by lower test sales for the detection of COVID-19 IgG and IgM antibodies.

Core Laboratory COVID-19 testing-related sales on Abbott’s ARCHITECT ® and Alinity i platforms were $10 million in 2024, $20 million in 2023, and $62 million in 2022.

Excluding COVID-19 testing-related sales, Core Laboratory sales increased 1.7 percent in 2024 and 6.5 percent in 2023.

Excluding the impact of foreign exchange and COVID-19 testing-related sales, Core Laboratory sales increased 5.8 percent in 2024 and 9.4 percent in 2023.

Excluding the effect of foreign exchange, total Medical Devices sales grew 13.7 percent in 2024 and 15.1 percent in 2023, led by double-digit growth in 2024 in Diabetes Care, Structural Heart, Electrophysiology and Heart Failure .

The 2025 and 2024 sales decrease in Rapid Diagnostics reflects lower demand for COVID-19 testing-related sales, which were $285 million in 2025 and $725 million in 2024.

In Core Laboratory, sales increased 2.1 percent in 2025 and 5.6 percent in 2024, driven by continued growth of Alinity product sales outside of China.

Lower sales in China were due to the impact of challenging market conditions, including the impact of volume-based procurement programs.

In 2024, sales increased due to higher volume of routine diagnostic testing performed in hospitals and other laboratories along with price increases.

Excluding the effect of foreign exchange, total Medical Devices segment sales grew 11.9 percent in 2025 and 13.7 percent in 2024, led by double-digit growth in Diabetes Care, Heart Failure, Electrophysiology, and Structural Heart, and in 2025, Rhythm Management.

Higher Diabetes Care sales were driven by continued growth in Abbott’s CGM systems in the U.S.

and internationally.

CGM sales totaled $6.4 billion in 2024, which reflected a 21.8 percent increase, excluding the effect of foreign exchange, over 2023 when CGM sales totaled $5.3 billion.

Procedure volumes continued to increase across the cardiovascular and neuromodulation businesses in 2024.

In Structural Heart, excluding the effect of foreign exchange, the 17.0 percent and 14.3 percent sales increases in 2024 and 2023, respectively, reflect continued growth of the Navitor ® and TriClip ® products, as well as growth in surgical valves, structural interventions and other transcatheter repair sales.

Electrophysiology sales, excluding the effect of foreign exchange, increased 14.4 percent in 2024 and 15.9 percent in 2023 which primarily reflects higher procedure volumes and increased demand for catheters and cardiac mapping products across all regions.

In Heart Failure, the 10.3 percent increase in sales in 2024, excluding the effect of foreign exchange, primarily reflects growth in heart assist devices, which offer treatment for chronic and temporary conditions.

In 2023, Heart Failure sales increased 12.0 percent, excluding the effect of foreign exchange, as procedure volumes and staffing challenges, which occurred during the COVID-19 pandemic, began to recover.

In Rhythm Management, the 6.9 percent increase in 2024, excluding the impact of foreign exchange, was primarily due to growth in Aveir ® leadless pacemaker and ASSERT-IQ ® implantable cardiac monitor sales.

In 2023, the 7.5 percent increase, excluding the impact of foreign exchange, was due to growth across the portfolio of low and high voltage pacemakers, led by the Aveir leadless pacemaker that launched in 2022.

In Vascular, the 6.7 percent increase in 2024, excluding the impact of foreign exchange, was primarily due to higher vessel closure sales.

In 2023, the 9.3 percent increase, excluding the impact of foreign exchange, was primarily due to the acquisition of CSI in April 2023.

CGM sales totaled $7.6 billion in 2025, representing a 17.4 percent increase, excluding the effect of foreign exchange, compared to $6.4 billion in 2024.

In He art Failure, sales grew 12.7 percent in 2025 and 10.3 percent in 2024, excluding the effect of foreign exchange.

The increase primarily reflects growth across the portfolio of ventricular assist devices and related accessories, as well as growth in CardioMEMs ® , an implantable sensor used for the early detection of heart failure.

In Structural Heart, sales increased 11.5 percent in 2025 and 17.0 percent in 2024, excluding the effect of foreign exchange, primarily driven by growth in TriClip ® , Navitor ® , and Mitraclip ® product sales.

Electrophysiology sales, excluding the effect of foreign exchange, increased 11.6 percent in 2025 and 14.4 percent in 2024, primarily due to higher procedure volumes and increased demand for Abbott's portfolio of products designed to diagnose and treat cardiac arrhythmias.

In Rhythm Management, sales increased 10.2 percent in 2025 and 6.9 percent in 2024, excluding the impact of foreign exchange, primarily driven by growth in Aveir ® leadless pacemakers.

In 2025, sales growth was partially offset by lower traditional pacemaker and implantable cardioverter defibrillator sales.

Abbott’s operations in Russia and Ukraine represent approximately 2 percent of Abbott’s total revenues and net assets, and to date the financial impact of Russia’s invasion of Ukraine has not been material to Abbott’s operations or financial condition.

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Gross profit margins were 52.6 percent of net sa les in 2025, 50.9 percent of net sales in 2024, and 50.3 percent of net sales in 2023.

The increase in 2024 reflects the favorable impacts of margin improvement initiatives, partially offset by the unfavorable effect of foreign exchange.

The decrease in 2023 reflects the unfavorable effects of lower sales of COVID-19 tests, foreign exchange, and higher costs for various manufacturing inputs, partially offset by the nonrecurrence of the negative impact in 2022 of the voluntary product recall in the nutritional business and the impact in 2023 of margin improvement initiatives.

The increase in 2025 reflects the favorable impact of margin improvement initiatives, partially offset by higher costs, including tariffs, and the unfavorable impact of foreign exchange.

The increase in 2024 reflects the favorable impact of margin improvement initiatives, partially offset by the unfavorable effect of foreign exchange.

Research and development (R&D) expenses were $2.9 billion in 2025, $2.8 billion in 2024, and $2.7 billion in 2023.

The increase in R&D expense in 2024 was primarily driven by higher spending on various projects, partially offset by lower 2024 charges for the impairment of in-process R&D (IPR&D) assets acquired in previous business combinations.

In 2023, the decrease in R&D expense was primarily driven by lower restructuring charges, lower impairment charges related to IPR&D acquired in previous business combinations, and other cost reductions.

The increases in R&D expenses in 2025 and 2024 were primarily driven by higher spending on various projects.

In 2024, higher project spending was partially offset by lower 2024 charges for the impairment of IPR&D assets acquired in previous business combinations.

Selling, general and administrative (SG&A) expenses were $12.3 billion in 2025, $11.7 billion in 2024, and $10.9 billion in 2023 .

In 2024, higher selling and marketing spending to drive growth across various businesses was partially offset by the favorable impact of foreign exchange.

The 2023 decrease in SG&A expenses reflects the favorable impact of foreign exchange and lower restructuring charges in 2023, as well as the non-recurrence of 2022 expenses related to the voluntary product recall in the Nutritional Products segment.

In 2025 and 2024, the increase in SG&A expenses was due to higher selling and marketing spending to drive growth across various businesses.

In 2024, SG&A spending was partially offset by the favorable impact of foreign exchange.

Restructurings

In 2024, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostic, Medical Devices, Established Pharmaceutical and Nutritional businesses, including the discontinuation of its ZonePerfect ® product line.

Abbott recorded employee related severance and other charges of $129 million , of which $62 million was recorded in Cost of products sold, $21 million was recorded in Research and development, and $46 million was recorded in Selling, general and administrative expenses.

Payments related to these actions totaled $ 32 million in 2024 and the remaining liability totaled $ 97 million at December 31, 2024.

In 2025, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostics, Nutritionals, Established Pharmaceuticals, and Medical Devices businesses.

Abbott recorded employee related severance and other charges of $274 million , of which $109 million was recorded in Cost of products sold, $53 million was recorded in R&D, and $112 million was recorded in SG&A expenses.

Payments related to these actions totaled $94 million in 2025 and the remaining liabilities totaled $180 million at December 31, 2025.

In addition, in 2025, Abbott recogniz ed fixed asset impairment charges of $28 million related to these restructuring plans.

In 2024, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostics, Medical Devices, Established Pharmaceuticals, and Nutritionals businesses, including the discontinuation of its ZonePerfect product line.

Abbott recorded employee related severance and other charges of $129 million , of which $62 million was recorded in Cost of products sold, $21 million was recorded in R&D, and $46 million was recorded in SG&A expenses.

In addition, Abbott recognized inventory-related charges of $34 million and fixed asset impairment charges of $12 million related to these restructuring plans.

In 2023, Abbott management approved plans to restructure various operations in order to reduce costs in its Medical Devices, Diagnostic, and Established Pharmaceutical businesses.

Abbott recorded employee related severance and other charges of $144 million of which approximately $56 million was recorded in Cost of products sold, $22 million was recorded in Research and development and $66 million was recorded in Selling, general and administrative expenses.

In 2023, Abbott management approved plans to restructure various operations in order to reduce costs in its Medical Devices, Diagnostics, and Established Pharmaceuticals businesses.

Abbott recorded employee related severance and other charges of $144 million, of which $56 million was recorded in Cost of products sold, $22 million was recorded in R&D, and $66 million was recorded in SG&A expenses.

In addition, Abbott recognized fixed asset impairment and inventory-related charges of $31 million related to these restructuring plans.

In 2022, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in its Medical Devices, Nutritional, Diagnostic, and Established Pharmaceutical businesses.

Abbott recorded employee related severance and other charges of $234 million of which $59 million was recorded in Cost of products sold, $36 million was recorded in Research and development and $139 million was recorded in Selling, general and administrative expenses.

In addition, Abbott recognized inventory related charges of $23 million and fixed asset impairment charges of $4 million related to these restructuring plans.

Interest Expense and Interest (Income)

Interest expense, net decreased from $215 million in 2024 to $185 million in 2025.

Interest expense decreased in 2024 due to the repayment of approximately $2.25 billion of long-term debt in September and November of 2023, partially offset by a reduction in interest income due to lower average cash and short-term investment balances versus the prior year.

Interest expense, net decreased $123 million in 2023 due t o the favorable impact of higher interest rates on interest income, partially offset by the negative impact of interest rate hedge contracts related to certain fixed-rate debt.

In 2025, interest expense decreased primarily due to the repayment of approximately $2.0 billion of long-term debt in November 2024, March 2025, and September 2025, as well as the maturity of an interest rate swap associated with the March 2025 debt.

Interest expense decreased in 2024 due to the repayment of $2.25 billion of long-term debt in September and November of 2023, partially offset by a reduction in interest income due to lower average cash and short-term investment balances versus the prior year.

Other (Income) Expense, net

Other income, net was $376 million of income in 2024, $479 million of income in 2023 and $321 million of income in 2022.

Other income, net includes income of approximat ely $542 million, $498 million, and $406 million in 2024, 2023, and 2022, respectively, related to the non-service cost components of the net periodic benefit costs associated with the pension and post-retirement medical plans.

The decrease in 2024 reflects the recognition of a $143 million loss on the sale of a non-core business related to the Established Pharmaceutical Products segment.

Other (income) expense, net was $548 million of income in 2025 , $376 million of income in 2024, and $479 million of income in 2023 .

Other (income) expense, net includes income of $590 million, $542 million, and $498 million in 2025, 2024, and 2023, respectively, related to the non-service cost components of the net periodic benefit costs associated with the pension and post-retirement medical plans.

The increase in 2025 and the decrease in 2024 were primarily due to the recognition of a $143 million loss on the sale of a non-core business related to the Established Pharmaceutical Products segment in 2024.

The increase in 2025 also reflects higher income associated with the non-service cost components of net pension and post-retirement medical benefit costs.

The decrease in 2024 was partially offset by an increase in income associated with the non-service cost components of net pension and post-retirement medical benefit costs.

In 2023, Other income, net included equity investment impairments that totaled approximately $39 million, as well as income from a $42 million reduction in the fair value of contingent consideration related to previous business acquisitions.

Taxes on Earnings

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Deferred income taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts.

Taxes on earnings include approximately $50 million, $22 million and $43 million in excess tax benefits associated with share-based compensation in 2024, 2023 and 2022, respectively.

As a result of the resolution of various tax positions related to prior years, taxes on earnings in 2024, 2023 and 2022 also include approximately $25 million, $80 million and $20 million of net tax expense, respectively.

In the fourth quarter of 2024, taxes on earnings includes $7.5 billion in non-cash valuation allowance adjustments resulting from the restructuring of certain foreign affiliates and the confirmation of certain tax filing positions.

Taxes on earnings included $92 million, $50 million, and $22 million in excess tax benefits associated with share-based compensation in 2025, 2024, and 2023, respectively.

As a result of the resolution of various tax positions related to prior years, taxes on earnings in 2025, 2024, and 2023 also included approximately $70 million of net tax benefit, $25 million, and $80 million of net tax expense, respectively.

In 2025, taxes on earnings included approximately $610 million of tax expense related to a deferred tax asset that was recognized as a significant non-cash tax benefit in a prior year.

In 2024, taxes on earnings included $7.5 billion in non-cash valuation allowance adjustments resulting from the restructuring of certain foreign affiliates and the confirmation of certain tax filing positions.

The restructuring improved profitability to several of Abbott’s affiliates and management concluded that the related preexisting deferred tax assets, which historically had a full valuation allowance, were more likely than not to be realizable in future periods.

In particular, Abbott considered the likelihood of sustained ongoing profitability of the affiliates as a positive factor that outweighed all available negative evidence considered.

Accordingly, Abbott released the full valuation allowance on such deferred tax assets and recorded the offset to tax expense.

Tax Cuts and Jobs Act (TCJA) includes a one-time transition tax that is based on Abbott’s total post-1986 earnings and profits (E&P) that were previously deferred from U.S.

Accordingly, Abbott released the full valuation allowance on such deferred tax assets and recorded the offset to taxes on earnings.

Tax Cuts and Jobs Act (TCJA) included a one-time transition tax that is based on Abbott’s total post-1986 earnings and profits (E&P) that were previously deferred from U.S.

income taxes.

The tax computation also requires the determination of the amount of post-1986 E&P considered held in cash and other specified assets.

As of December 31, 2024, the remaining balance of Abbott’s transition tax obligation related to the TCJA is approximately $432 million, which will be paid over the next two years as allowed by the TCJA.

The tax computation also required the determination of the amount of post-1986 E&P considered held in cash and other specified assets.

As of December 31, 2025, the remaining balance of Abbott’s transition tax obligation related to the TCJA was approximately $205 million.

The final installment will be paid in 2026 as allowed by the TCJA.

Undistributed foreign earnings remain indefinitely reinvested in foreign operations.

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In the U.S., Abbott’s federal income tax returns through 2016 are settled.

In September 2023, Abbott received a Statutory Notice of Deficiency (SNOD) from the U.S.

Internal Revenue Service (IRS) for the 2019 Federal tax year in the amount of $417 million.

In September 2023, Abbott received a Statutory Notice of Deficiency (SNOD) from the IRS for the 2019 Federal tax year in the amount of $417 million.

The primary adjustments proposed in the SNOD relate to the reallocation of income between Abbott’s U.S.

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Tax Court contesting the SNOD in December 2024.

Abbott intends to vigorously defend its filing positions through ongoing discussions with the IRS, the IRS independent appeals process and/or through litigation as necessary.

Abbott reserves for uncertain tax positions related to unresolved matters with the IRS and other taxing authorities.

Abbott continues to believe that its reserves for uncertain tax positions are appropriate.

Abbott and the IRS are in active discussions regarding several of the disputed items contained in the 2017 – 2020 SNODs.

In July 2024, Abbott received a $413 million tax assessment from the Malaysian tax authorities for the 2023 tax year.

The assessment applies a property capital gains tax on the value of the shares associated with the intercompany sale of an affiliate.

Abbott believes the assessment of the Malaysian tax authority to be without merit.

In October 2025, the Penang High Court upheld the assessment of the Malaysian tax authority.

In October 2025, Abbott filed an appeal with the Malaysian Court of Appeals.

There are numerous other income tax jurisdictions for which tax returns are not yet settled, none of which Abbott expects to be individually significant.

Abbott intends to vigorously defend its filing positions in all jurisdictions in which it has unresolved tax matters through ongoing discussions with taxing administrations and/or through litigation as necessary.

Abbott reserves for uncertain tax positions related to unresolved tax matters where Abbott’s tax filing position does not meet the standard for recognition of an income tax benefit.

Abbott continues to believe that the amount of its recorded reserves for uncertain tax positions is appropriate.

Reserves for interest and penalties are not significant.

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Pillar 1 proposes to reallocate taxing rights among the jurisdictions in which in-scope multinational corporations operate.

Abbott is continuing to analyze the Pillar 1 proposal.

Pillar 2 proposes to assess a 15 percent minimum tax on the earnings of in-scope multinational corporations on a country-by-country basis.

Numerous countries have enacted legislation to adopt the Pillar 2 model rules.

The enactment of current Pillar 2 model rules did not and is not projected to have a material impact to Abbott's consolidated financial statements.

On January 5, 2026, the OECD released administrative guidance that, when enacted, exempts U.S.-parented groups from the Pillar 2 minimum tax.

Abbott continues to monitor legislative developments and assess any potential impacts on Abbott's operations for both the Pillar 1 and Pillar 2 proposals.

See Note 15 — Taxes on Earnings to the consolidated financial statements for a full reconciliation of the effective tax rate to the U.S.

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In the European Union (EU), diagnostic products are also categorized into different categories and the regulatory process, which had been governed by the European In Vitro Diagnostic Medical Device Directive, depends upon the category.

Certain product categories requiring review and approval by an independent company, known as a Notified Body, before the manufacturer can affix a CE mark to the product to declare conformity to the Directive.

Certain product categories require review and approval by an independent company, known as a Notified Body, before the manufacturer can affix a CE mark to the product to declare conformity to the Directive.

Other products only require a self-certification process.

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Established Pharmaceuticals — Abbott focuses on building country-specific portfolios made up of high-quality medicines that meet the needs of people in emerging markets.

Over the next several years, Abbott plans to expand its

product portfolio in key therapeutic areas and biosimilars with the aim of addressing the health needs of more people in emerging markets and being among the first to launch new off-patent and differentiated medicines.

Over the next several years, Abbott plans to expand its product portfolio in key therapeutic areas and biosimilars with the aim of addressing the health needs of more people in emerging markets and to be among the first to launch new off-patent and differentiated medicines.

In addition, Abbott continues to expand existing brands into new markets, implement product enhancements that provide value to patients, and acquire strategic products and technology through licensing activities.

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• Heart Failure – Continued enhancements to Abbott’s mechanical circulatory support and pulmonary artery pressure systems, including enhanced clinical performance and usability.

• Electrophysiology – Development of next-generation technologies in the areas of ablation, diagnostic, mapping, and visualization and recording.

• Electrophysiology – Development of next-generation technologies in the areas of ablation, mapping and navigation, and diagnostics.

• Vascular – Development of next-generation technologies for use in coronary and peripheral vascular procedures.

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• Neuromodulation – Development of clinical evidence and next-generation technologies leveraging digital health to support improved patient clinical outcomes, physician engagement, and expanded indications in the treatment of chronic pain, movement disorders, and other indications.

• Diabetes Care – Develop enhancements and additional indications for continuous monitoring products to help patients improve their ability to manage diabetes and for use beyond diabetes.

• Diabetes Care – Develop enhancements, additional indications, and tools for continuous monitoring products to help with the management of diabetes, as well as to expand use beyond diabetes.

Nutritionals — Abbott is focusing its research and development spend on platforms that span the pediatric and adult nutrition areas:

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Numerous new products that build on advances in these platforms are currently under development, including clinical outcome testing, and are expected to be launched over the coming years.

Core Laboratory Diagnostics — Abbott continues to commercialize its next-generation blood and plasma screening, immunoassay, clinical chemistry and hematology systems, along with assays, including a focus on unmet medical needs, in various areas including infectious disease, cardiac care, metabolics, oncology, and neurologic assays as well as informatics solutions to help optimize diagnostics laboratory performance and automation solutions to increase efficiency in laboratories.

Rapid Diagnostics — Abbott’s research and development programs focus on the development of diagnostic products for infectious disease, cardiometabolic disease and toxicology.

In addition, the Diagnostic Products segment continues to pursue the FDA’s customary regulatory process for remaining COVID-19 tests for which Emergency Use Authorizations (EUAs) were obtained and yet to be cleared.

Given the diversity of Abbott’s business, its intention to remain a broad-based health care company and the numerous sources for potential future growth, no individual project is expected to be material to cash flows or results of operations over the next five years.

Diagnostics — Abbott continues to develop and commercialize next-generation blood and plasma screening systems and assays, as well as Core Laboratory immunoassay, clinical chemistry and hematology diagnostic systems and assays.

Assay development pipelines include a focus on unmet medical needs, in various areas including infectious disease, cardiac care, metabolics, oncology, women’s health, and neurologic assays, as well as informatics solutions to help optimize diagnostic laboratory performance and automation solutions to increase efficiency in laboratories.

Research and development programs also include development of rapid diagnostic products for infectious disease, cardiometabolic disease, and toxicology applications.

Given the diversity of Abbott’s business, its intention to remain a broad-based healthcare company and the numerous sources for potential future growth, no individual project is expected to be material to cash flows or results of operations over the next five years.

Factors considered included research and development expenses projected to be incurred for the project over the next year relative to Abbott’s total research and development expenses, as well as qualitative factors, such as marketplace perceptions and impact of a new product on Abbott’s overall market position.

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Net cash from operating activities amounted to $9.6 billion, $8.6 billion, and $7.3 billion in 2025, 2024, and 2023, respectively.

The increase in Net cash from operating activities in 2024 as compared to 2023 is primarily due to higher segment operating earnings and improved working capital management, partially offset by higher cash payments for income taxes.

The decrease in Net cash from operating activities in 2023 compared to 2022 was primarily due to the decline in operating earnings and increased payments related to accounts payable and accrued liabilities, partially offset by lower expenditures for inventory and lower cash payments for income taxes due to lower earnings.

The increase in Net cash from operating activities in 2025 as compared to 2024, and in 2024 compared to 2023, was primarily due to higher segment operating earnings and improved working capital management, partially offset by higher cash payments for income taxes.

A substantial portion of Abbott’s cash and cash equivalents at December 31, 2025, is held by Abbott affiliates outside of the U.S.

If these funds were needed for operations in the U.S., Abbott does not expect to incur significant additional income taxes in the future to repatriate these funds.

Abbott funded $349 million in 2024 and 2023, and $413 million in 2022 to defined benefit pension plans.

Abbott expects pension funding of approximately $302 million in 2025 for its pension plans.

Abbott funded $309 million in 2025 and $349 million in both 2024 and 2023 to defined benefit pension plans.

Abbott expects to contribute approximately $85 million to its pension plans in 2026.

Abbott expects annual cash flow from operating activities to continue to exceed Abbott’s capital expenditures and cash dividends.

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Abbott has readily available financial resources, including unused lines of credit that support commercial paper borrowing arrangements and provide Abbott with the ability to borrow up to $5 billion on an unsecured basis.

On January 29, 2024, Abbott terminated its 2020 Five Year Credit Agreement (2020 Agreement) and entered into a new Five Year Credit Agreement (Revolving Credit Agreement).

In 2024, Abbott terminated its 2020 Five Year Credit Agreement (2020 Agreement) and entered into a new Five Year Credit Agreement (Revolving Credit Agreement).

There were no outstanding borrowings under the 2020 Agreement at the time of its termination.

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As of December 31, 2025, Abbott's total debt outstanding was $12.9 billion, of which approximately $3.0 billion will mature in 2026.

On June 26, 2024, Abbott modified its existing, yen-denominated 5-year term loan scheduled to mature in November 2024.

The amended terms include a net increase in principal debt from ¥59.8 billion to ¥92.0 billion, with a new maturity date in June 2029.

In 2024, Abbott modified its existing, yen-denominated 5-year term loan scheduled to mature in November 2024.

The amended terms included a net increase in principal debt from ¥59.8 billion to ¥92.0 billion, with a new maturity date in June 2029.

The modified, 5-year term loan bears interest at the Tokyo Interbank Offered Rate (TIBOR) plus a fixed spread, and the interest rate is reset quarterly.

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The ¥92.0 billion loan is designated as a hedge of Abbott’s net investment in certain foreign subsidiaries.

While Abbott plans to fund this transaction with cash on hand and borrowings, the bridge facility will provide back-up financing.

On September 15, 2025, Abbott repaid the $500 million outstanding principal amount of its 3.875% Notes upon maturity.

On March 17, 2025, Abbott repaid the $1.0 billion outstanding principal amount of its 2.95% Notes upon maturity.

On November 19, 2024, Abbott repaid the €590 million outstanding principal amount of its 0.10% Notes upon maturity.

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The repayment equated to approximately $1.2 billion.

In September 2023, Abbott repaid approximately $197 million of debt assumed as part of a recent business acquisition.

In September 2023, Abbott repaid approximately $197 million of debt assumed as part of a prior business acquisition.

On October 11, 2024, the board of directors authorized the repurchase of up to $7 billion of Abbott common shares, from time to time (the "2024 repurchase program").

The 2024 repurchase program is in addition to the unused portion of the 2021 repurchase program, which the board of directors approved in December 2021 and authorized the repurchase of up to $5 billion of Abbott’s common shares from time to time.

As of December 31, 2024, $293 million remains available for repurchase under the 2021 repurchase program.

In 2024 and 2023, Abbott repurchased approximately 10.2 million and 9.8 million, respectively, of its common shares for $1.1 billion and $1.0 billion, respectively, under the 2021 repurchase program.

In 2022, Abbott repurchased 32.3 million of its common shares for $3.7 billion which fully utilized the authorization remaining under the October 2019 share repurchase program, and a portion of the 2021 repurchase program.

The 2024 repurchase program was in addition to the unused portion of the 2021 repurchase program, which the board of directors approved in December 2021, and authorized the repurchase of up to $5 billion of Abbott’s common shares from time to time.

In 2024 and 2023, Abbott repurchased 10.2 million and 9.8 million, respectively, of its common shares for $1.1 billion and $1.0 billion, respectively, under the 2021 repurchase program.

In 2025, Abbott repurchased 4.8 million of its common shares for $604 million, which fully utilized the $293 million authorization remaining under the 2021 share repurchase program, and a portion of the 2024 repurchase program.

As of December 31, 2025, $6.7 billion remains available for repurchase under the 2024 repurchase program.

Abbott declared dividends of $2.40 per share in 2025 compared to $2.24 per share in 2024, an increase of 7.1 percent.

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Working Capital

Working capital was $9.5 billion at December 31, 2024 and $8.8 billion at December 31, 2023.

The increase in working capital in 2024 primarily reflects an increase in cash and cash equivalents and accounts receivable, partially offset by an increase in the current portion of long-term debt.

The increase in cash and cash equivalents from $6.9 billion at December 31, 2023 to $7.6 billion at December 31, 2024 primarily reflects the cash generated from operations and an increase in Abbott's yen-denominated loan, partially offset by the payment of dividends and capital expenditures.

Working capital was $9.5 billion at December 31, 2025, and December 31, 2024.

Working capital remained unchanged from the prior year primarily as an increase in cash and cash equivalents and accounts receivable was offset by an increase in the current portion of long-term debt and other accrued liabilities.

The increase in cash and cash equivalents from $7.6 billion at December 31, 2024, to $8.5 billion at December 31, 2025, primarily reflects the cash generated from operations, partially offset by the payment of dividends and capital expenditures.

Abbott monitors the credit worthiness of customers and establishes an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial asset.

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Capital Expenditures

Capital expenditures of $2.2 billion in 2024 and 2023, and $1.8 billion in 2022 were principally for upgrading and expanding manufacturing and research and development facilities and equipment in various segments, investments in information technology, and laboratory instruments placed with customers.

Capital expenditures of $2.2 billion in 2025, 2024, and 2023 were principally for upgrading and expanding manufacturing and research and development facilities and equipment in various segments, investments in information technology, and laboratory instruments placed with customers.

Contractual Obligations

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Abbott's material cash requirements include the following contractual obligations:

Debt — Principal payments required on long-term debt outstanding at December 31, 2024 are $1.5 billion in 2025, $2.9 billion in 2026, $617 million in 2027, $650 million in 2028, $583 million in 2029 and $8.0 billion in 2030 and thereafter.

Debt — Principal payments required on long-term debt outstanding at December 31, 2025, are $3.0 billion in 2026, $700 million in 2027, $653 million in 2028, $591 million in 2029, $650 million in 2030, and $7.4 billion in 2031 and thereafter.

Interest payments required on long-term debt outstanding at December 31, 2025, are projected to be $485 million in 2026, $401 million in 2027, $395 million in 2028, $386 million in 2029, $377 million in 2030, and $4.3 billion in 2031 and thereafter.

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Business Acquisitions

On November 19, 2025, Abbott entered into a definitive agreement to acquire Exact Sciences Corporation (Exact Sciences), which is expected to enable Abbott to enter the cancer diagnostics market.

The acquisition is subject to customary closing conditions, including the approval of Exact Sciences shareholders, and obtaining the required regulatory clearances.

Abbott's financing contemplates absorption of Exact Sciences' estimated $1.8 billion of net debt.

While Abbott plans to fund this transaction with cash on hand and borrowings, the bridge facility will provide back-up financing.

On September 22, 2023, Abbott completed the acquisition of Bigfoot, which furthers Abbott's efforts to develop connected solutions for making diabetes management more personal and precise.

The purchase price, the final allocation of acquired assets and liabilities, and the revenue and net income contributed by Bigfoot since the date of acquisition are not material to Abbott's consolidated financial statements.

On April 27, 2023, Abbott completed the acquisition of CSI for $20 per common share, which equated to a purchase price of $851 million .

On April 27, 2023, Abbott completed the acquisition of Cardiovascular Systems, Inc.

(CSI) for $20 per common share, which equated to a purchase price of $851 million .

The transaction was funded with cash on hand and accounted for as a business combination.

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Abbott’s primary markets are highly competitive and subject to substantial government regulations throughout the world.

Abbott expects debate to continue at all government levels worldwide over the manufacture, quality assurance requirements, marketing authorization processes, post-market surveillance requirements, availability, method of delivery, and payment for health care products and services, as well as data privacy and security.

It is not possible to predict the extent to which Abbott or the health care industry in general might be adversely affected by these factors in the future.

Abbott expects debate to continue at all government levels worldwide over the manufacture, quality assurance requirements, marketing authorization processes, post-market surveillance requirements, availability, method of delivery, and payment for healthcare products and services, as well as data privacy and security.

It is not possible to predict the extent to which Abbott or the healthcare industry in general might be adversely affected by these factors in the future.

A more complete discussion of these factors is contained in Item 1, Business, and Item 1A, Risk Factors.

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Recently Adopted Accounting Standards

In December 2023, the FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires an entity to disclose annually additional information related to the company's income tax rate reconciliation and income taxes paid during the period.

The guidance is required to be applied prospectively with the option to apply the standard retrospectively.

Abbott adopted the standard on January 1, 2025, and applied the guidance prospectively.

The new standard did not have an impact on Abbott's consolidated financial statements, but required additional disclosures, as presented in Note 15 — Taxes on Earnings.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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Abbott adopted the standard on January 1, 2024.

The new standard did not have an impact on Abbott's consolidated financial statements, but required additional disclosures as included in Note 16 — Segment and Geographic Area Information.

In September 2022, the FASB issued Accounting Standards Update (ASU) 2022-04, Disclosure of Supplier Finance Program Obligations , which requires an entity to report information about its supplier finance program.

Abbott adopted the standard on January 1, 2023.

The new standard did not have an impact on Abbott's consolidated financial statements.

The new standard did not have an impact on Abbott's consolidated financial statements, but required additional disclosures, retrospectively applied to all periods presented in Note 16 — Segment and Geographic Area Information.

Recent Accounting Standards Not Yet Adopted

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Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

The guidance should be applied prospectively with the option to apply the standard retrospectively.

The standard becomes effective for Abbott for full year 2025 reporting.

Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.

Private Securities Litigation Reform Act of 1995 — A Caution Concerning Forward-Looking Statements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis