Good morning, and thank you for standing by. Welcome to Abbott Laboratories' Third Quarter 2025 Earnings Conference Call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star one one keys on your touch tone phone. This call is being recorded by Abbott Laboratories. With the exception of any participants' questions asked during the question and answer session, the entire call, including the question and answer session, is material copyrighted by Abbott Laboratories. It cannot be recorded or rebroadcast without Abbott Laboratories' expressed written permission. I would now like to introduce Mr. Mike Comilla, Vice President, Investor Relations. Mike Com

Good morning, and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer, and Philip Boudreau, Executive Vice President Finance and Chief Financial Officer. Robert and Philip will provide opening remarks. Following their comments, we will take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2025. Abbott Laboratories cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in forward-looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott Laboratories are discussed in Item 1A, Risk Factors, to our annual report on Form 10 for the year ended 12/31/2024. Abbott Laboratories undertakes no obligation to release publicly revisions to forward-looking statements as a result of subsequent events or developments except as required by law. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott Laboratories' ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com. Note that Abbott Laboratories has not provided the related GAAP financial measures on a forward-looking basis for the non-GAAP financial measures for which it is providing guidance because the company is unable to predict with reasonable certainty without unreasonable effort the timing and impact of certain items which could significantly impact Abbott Laboratories' results in accordance with GAAP. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert.

Thanks, Mike. Good morning, everyone, and thank you for joining us. Today, we reported organic sales growth of 7.5%, excluding COVID test sales. Our growth was led by double-digit growth in medical devices, where several high-growth segments showed an acceleration in growth in the third quarter compared to growth in the first half of this year. And also high single-digit growth in established pharmaceuticals led by double-digit growth in our key 15 markets. Earnings per share rose to $1.30, up high single digits compared to last year and up double digits when excluding the impact of the expected large year-over-year decline in COVID test sales that occurred in the third quarter. Our performance continues to be driven by innovation, positioning Abbott Laboratories to consistently deliver high-quality results and durable long-term value to our shareholders. Recently launched new products generated nearly $5 billion in sales this quarter and added more than 100 basis points to organic sales growth. Looking ahead, we expect increasing contributions from new products across the portfolio with a balanced mix of iterative and transformative innovation.

I'll now summarize our third quarter results in more detail before turning the call over to Philip. And I'll start with Nutrition, where sales increased 4% in the quarter led by the adult nutrition business. Ensure remains the cornerstone of our adult nutrition portfolio, trusted by millions of consumers seeking to maintain or improve their health. Strong brand recognition, combined with favorable demographic and dietary trends, including an increased focus on protein intake and immune system health, continues to fuel our growth. Growth in adult nutrition was driven by 10% growth in international markets, where we continue to see strong demand from both Ensure and Glucerna. To support future growth, we continue to invest in these well-known brands to ensure they evolve along with changing consumer preferences. We recently launched a new version of Glucerna that contains only one gram of sugar. And later this month, we'll launch a new version of Ensure that contains 42 grams of protein. Moving to diagnostics, where we saw modest sales growth in the quarter, excluding COVID testing sales. As expected, challenging market conditions in China impacting both price and volume remain a headwind for our core lab diagnostic business. Excluding China, Core Lab Diagnostics grew 7% with markets such as the US showing an acceleration in growth in the third quarter compared to growth in the first half of this year. Our strong consistent performance outside of China reflects durable underlying demand in markets around the world.

And growth of 8% in point of care diagnostics was driven by growing adoption of two first-of-a-kind tests. Our point of care concussion test and a high sensitivity troponin test which allows for earlier and more accurate detection of a heart attack. Turning to EPD, sales increased 7% led by double-digit growth in our key 15 markets, highlighting broad-based demand and strong commercial execution. From a product portfolio perspective, several therapeutic areas delivered strong contributions including gastroenterology, cardiometabolic, and pain management. These areas continue to benefit from favorable demographic trends and growing demand for high-quality affordable medicines. We continue to make good progress as it pertains to our biosimilar strategy, a key growth pillar for EPD. During the quarter, we advanced the regulatory approval process for several biosimilars and remain on track with our planned cadence of product and geographic launches that began this year. And I'll wrap up with Medical Devices, where sales grew 12.5% driven by double-digit growth in diabetes care, electrophysiology, cardiac rhythm management, heart failure, and structural heart. In diabetes care, sales of continuous glucose monitors were $2 billion in the quarter and grew 17%. In electrophysiology, sales grew double digits in the US and internationally. The launch of our new Volt PSA catheter in Europe continues to go very well and helped deliver double-digit growth in ablation catheters in international markets this quarter. Feedback from European physicians who have used Volt continues to be very positive, and we look forward to bringing Volt to the US market next year. In structural heart, growth of 11% was led by share gains in TAVR and growing adoption of Triclip. During the quarter, we achieved important milestones in our Structural Heart business. In July, we received regulatory approval for Triclip in Japan. Triclip is the first and only minimally invasive treatment option available to patients in Japan to treat tricuspid regurgitation. And in August, we received CE Mark for expanded indication for our TAVR valve Navitor to treat people who are at low or intermediate risk for open heart surgery. This expanded indication was supported by data from our VANTAGE study, which was presented as a late breaker at the European Society of Cardiology Congress. In cardiac rhythm management, growth of 13% was led by strong uptake of our leadless pacemaker Avera, which is expanding the market and capturing share in both the single and dual chamber pacing segments. Our vision for Avera was to help change the standard of care for cardiac pacing, and that vision is now becoming a reality with our cardiac rhythm management business outperforming the market for ten consecutive quarters and driving acceleration in growth from high single digits last year to double digits this quarter. Heart failure growth of 12% was driven by growth across our portfolio of ventricular assist devices and growth of CardioMEMS, our implantable sensor used for the early detection of heart failure. And vascular growth of 5% was led by continued strong performance in our market-leading portfolio of vessel closure products and increasing contributions from ESPRIT, our below-the-knee resorbable stent. In August, we received CE mark for ESPRIT, and we look forward to bringing this innovative technology to people outside the United States who suffer from peripheral artery disease. Lastly, neuromodulation growth of 7% was led by strong performance of our Eterna rechargeable spinal cord stimulation device in international markets, reflecting both continued uptake in existing markets and launches in new markets. So in summary, we delivered another very good quarter. Our pipeline has been highly productive and continues to fuel growth. And we remain on track to deliver high single-digit organic sales growth and double-digit EPS growth. I'll now turn over the call to Philip. Thanks, Robert.

As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our third quarter results, sales increased 5.5% or 7.5% when excluding COVID testing-related sales. Adjusted earnings per share of $1.30 was in line with consensus estimate.

Foreign exchange had a favorable year-over-year impact of 1.4% on third-quarter sales, which was less favorable than what we forecasted at the time of our earnings call in July. Regarding other aspects of the P&L, the adjusted gross margin profile was 55.8% of sales, which as expected reflects a decrease compared to the prior year due to the impact of tariffs. Adjusted R&D was 6.4% of sales, adjusted SG&A was 26.4% of sales. Adjusted operating margin was 23% of sales, which reflects an increase of 40 basis points compared to the prior year. And based on current rates, we expect exchange to have a favorable impact of approximately 1.5% on our fourth-quarter reported sales. With that, we will now open the call for questions.

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press 11 again. For optimal sound quality, we kindly ask that you please use your handset instead of your speakerphone when asking your question. And, again, that's 11 to ask a question. And our first question will come from Larry Biegelsen from Wells Fargo. Your line is open.

Good morning and congrats on the quarter. Thanks for taking the question. Robert, back in July, you sounded comfortable with consensus sales and EPS for 2026. I'd love to hear your high-level thoughts on next year if you're still comfortable with consensus, it seems like you have some nice tailwinds next year. Thanks for taking the question.

Yeah, Larry. Yeah. I'm very comfortable with consensus. In fact, you know, this is a question that was asked last year in our Q3 earnings call and consensus for 2025 at that time was, you know, seven and a half percent, EPS growth of, percent. That's the same consensus estimates that we have today. And I was comfortable with delivering that type of growth at that at this time last year and I'm comfortable again today forecasting to deliver that. That type of growth next year. These estimates that you referenced, they're pretty much in line with the results that we've delivered year to date. And we deliver those results in a year where we face I'd say, than expected headwinds in diagnostics and unexpected impact here from tariff. I think that's just a great example of of the culture we have here at Abbott Laboratories. So it's just no excuses, just adapt and adapt and deliver and, you know, the portfolio that we have, we have the ability to do that. But when I think about our ability to sustain this level of performance that we're seeing in '25 into 2026, I really see it as you know, kind of three key buckets of of of growth for us, Larry. First of all, there's underlying momentum in the current portfolio, whether it's in med tech, in established pharmaceuticals, large portion of our diagnostic business. And I expect that I expect that momentum to continue. You know, we've got high growth products here, whether it's Avera, TAVR, Libre, TriClip, I'm sure we'll talk about those. So that's one big driver of our growth. Sustaining into next year. Second one, I'd say, new product launches. We've got a lot of new product launch cadence into next year, whether it's a volt in The US, pack lex Duo, our dual analyte sensor the new Alinity N diagnostic system, biosimilars. I mean, these are all, product launches here that will add to our sales and sales growth, and that will gain momentum. Over the course of the year. And then as I said also, we've got let's say, some easing of some of the headwinds that we had this year. Pretty significant headwind in diagnostic. We talked about that, I guess, in July. Over a billion dollars of headwind, whether it's the VV pricing dynamics in China this year or the or the decline in COVID testing? I think we'll start to see a full lapping of that next year. On a year basis, but we'll start to see some of it quite frankly, in Q4. So so I feel I feel very confident and comfortable with that type of top line growth. And and if you look also why we're in this position, Larry, I mean, we made investments in 2020, 2021. You know, these product launches that I'm highlighting here, those those investments that we made. So we'll be able to deliver that high single digit top line growth double digit EPS growth, while at the same time, I'm gonna remain unwavering here in the commitment to invest in the pipeline and drive growth organically. We'll have close to 200 clinical trials across all of our businesses, across variety of different geographies next year. And within those, we're gonna initiate some really important pivotal trials year that we're funding for products that we expect are going to be significant contributors in future, whether it's the mitral valve replacement clinical trial that will go into Our balloon TAVR trial will go into IDE. AVARE conduction system pacing, peripheral IVL IDE trial, a continuous lactate monitor sensor, IDE trial. So so we could do we can maintain this top and bottom line growth while at the same time making the investments in the portfolio that we know we need to do. And then we got a good track record here expanding our gross margins and our op margins. We've got great gross margin improvement teams. We've been able to work hard this year be able to mitigate the impacts of tariffs as they have full year effect. Next year. So we feel good about being able to drive the top and the bottom line. The portfolio has been pretty resilient over these years. It's got nice offensive and some defensive kind of characteristics. Overall, I feel very good about the momentum we have going into the momentum that we have in the second half and of this year, into next year and just feel good about the outlook that we've got for next year. Yep.

Yeah. Perfect. For taking the question.

Thank you.

Our next question will come from Robbie Marcus from JPMorgan. Your line is open.

Great. Good morning, and thanks for is Robert, two quick ones from me, one on diabetes, one on EP. Maybe first on diabetes, such an important driver to Abbott Laboratories. Beat overall driven by outside The U. S. With the slight miss in The U. S. Just given the investor focus there, was hoping you could give a little more color on what's happening in The U. S. And outside The U. S. And how you're thinking about the market developing, particularly in The U. S. With the ketone sensor on its way hopefully next year? And what seems like increasing commentary on, CMS coverage of non-intensive type two?

Sure, Robbie. Yeah, US grew 19% We really have any kind of comps on that. So and year to date, The U. S. Is up 25%. I think growth I think what you're referring to a little bit there is growth in the first half of the year was a little bit higher, really due to some shelf restocking dynamics that we saw. If you remember last year, Robbie, we launched Libre three plus and had a pretty significant drive in demand here higher than what we had anticipated. And the new manufacturing facility we made the investment wasn't fully up and running. So that caused back orders with customers, it caused back orders to wholesalers at the pharmacy channel. The way we had planned this year was our site would come up and running and it would be more of a linear kind of recovery But the factory actually did really well in the first half. So that led to customers doing some restocking earlier than what we had bought. And a little bit higher quite frankly just given the demand that they were seeing in in Libre three. So that resulted in a little bit of a pull forward of a couple percentage points. Of growth. So I think it's just a little bit of a timing dynamic. I think most importantly we remain on track with the original U. S. Full year growth assumption of over 20%. So demand is still very, very strong. And we're seeing that. To your question on, you know, kinda next year, yeah, I expect to see another real strong year of growth in in The US with additional demand coming from the from the new, from the new sensor the new dual analyte sensor. I think that's gonna help drive increasing penetration, in that intensive in user segment. So I'd say, there's still room for penetration I would say, in that segment. In The US, it's there's still some rum also, but I'd say gonna really help us drive drive share gains. Whether it's in you know, pumper in the pumper segment or just in general intensive insulin user segments. There's still a lot of penetration in the basal segment I mean, I know because of the dual analyte sensor, we get a lot of attention on this insulin, intensive insulin segment. But I'm still very bullish on the basal segment. In The US, it's only about 20% penetrated today. Internationally, it's only 5% it's less than 5%. So I think there's still a lot of opportunity for growth in The U. S. With continued basal penetration and then not to mention the potential for CMS to cover type two non insulin. I think that's an opportunity. See positive signs of that developing. The ADA has been very of that. I think you can probably see proposed coverage of that come out sometime next year, maybe in the first half But then you've got then you know this pretty well, Robert. You got your normal you know, timing there of comment periods, the final covered decision, when the actual date's gonna be. So I think there's a scenario where that could happen next year. But and we'll be ready to execute, but I'm not building that I'm not building that assumption of that segment coming in or having any significant contributions in 2026. It's not in my base forecast. For 2026. So but I think you know, if it I think this will be a a real nice win for CMS patients. So I think we've got a lot of growth opportunities between the patient segments between the technology being launched across geographies. I know you're question was focusing lot on The US. I think we've got a great portfolio and a great lineup as we go into The US next year. But I also think that just tremendous opportunity internationally. And that's an area of particular strength for us that we built the scale, that we built the technology and the cost positions there. So, feel good about I good about Libre. I feel good about our U. S. Position. And the momentum that we're going have US and internationally.

I appreciate that. And then you talked about new product launches, Volt was one that you highlighted. We're expecting that I believe, around midyear. Next year in The U. S. Just maybe speak to Volt, the early feedback in Europe that you've received and how people should think about the ramp in cadence of Voalte and overall EP as we move into next year? Thanks a lot.

Sure. Well, we're seeing acceleration on our growth rate in EP, obviously, the second half. We knew that was going to be the case. Second half was going be better than the first half. And 26 will be better than 25. I think that you've seen here double digit growth across the board, more specifically also in our ablation catheter portfolio. So yeah, I feel good about what we've done here, Ravi. I mean, this idea that we've been playing defense over the last couple of couple of years, it's actually been a quiet offensive strategy where we've used the adoption of PSA on other competitive systems to increase our capital footprint. Now we'll be in a position to bring in the catheter, the PFA catheter It's doing very well. I just got some feedback. Yesterday and, been following, the rollout You know, it's going very well. I'd say efficacy and efficiency, those seem to be table stakes right now. PFA has proven to work and get the job done more quickly. So I think what I'm seeing now is longer term durability of results, safety, These are becoming quickly think, the points of competitive differentiation. And I think Volt is gonna offer a couple areas there. I'm not I'm not the I'm not the expert on all this, but what I've heard so far has been that two advantages that come across loud and clear for Volt is it delivers energy in a in a very kind of focused direction. They're The lesions are are are broader. They're deeper. Seem to be more durable and minimizes the risk of hemolysis. And then the second thing I continue to hear, resounding positive feedback is the integration with, you know, with Insight is a game changer. Right? That real time contact visualization that we always talked about, we thought that that was gonna be an important differentiation. And we're seeing that. It reduces because you've got that real time. We're seeing that it's reducing the amount of applications And as a result of that minimizing muscle contraction. And that minimization of muscle contraction allows us to then run these procedures with conscious sedation rather than exclusive with general anesthesia. I think that's hugely important aspect if you look at what's going on with healthcare systems and the difficulties with dental anesthesia, and having that that specialty ready to go at any given time. So that gives us flexibility in a lot of European markets. In a lot of segments here in The US. So we'll continue to roll it out internationally and I think your timing for for Volt is is is an okay timing for now. I mean, obviously, we're gonna try and target to to see an earlier approval, but for now, I think that's not a bad timing to have. And but I think what's been clear for me over these last couple of years is just the importance of the full portfolio. And I think that Abbott Laboratories has shown that it does have a full portfolio, not just of the mapping, the capital, the the talent and the clinical specialists that are out in the field. But also bringing in a wide variety of different PFA tools, whether it's, you know, a one shot, whether gonna be a focal PFA, through our pack deflects that we we expect to get approval in Europe next year. Quite frankly, it's been increasingly clear to me that the company are going to need more than just PFA. You're going to need to have PFA and unique gonna need to have LAA. So and we've got both of those. So I don't think it's a question of Abbott Laboratories being late. We're right on time, and we're complete with the full portfolio that we need. So I expect EP to do much better in '26 than what it did this year, and I think this year has done pretty well too. Appreciate all the insights. Thanks, Robert.

Thank you. Our next question comes from David Roman from Goldman Sachs. Your line is open.

Thank you. Good morning. I wanted to switch gears a little bit on to the Diagnostics business. Mean clearly, a lot of focus this year on some of the discrete headwinds that you faced around China VBP and DRG updates. The dynamics with USAID and COVID testing, I think you made clear in your comments around '26 an expectation that those headwinds start to moderate. But could you maybe talk a little bit more on some of the underlying drivers of the business and how you think about an overall acceleration in the Diagnostics business going forward?

Sure. I don't think the dynamics that we've been talking about, David, have changed. And I don't think that's a bad thing to be quite honest with you because it it just shows that I think we've got a handle on kind of the headwind, that we've been facing. Which was really the VBP in the diagnostic area. I think of the things I talked about, you know, different from other VBPs that we've seen, in China is that you know, usually, if you want a VVP kinda tender, you you you you have a price hit, but then you've got volume kind of offset. I think you just raised there one of challenges we've seen in this segment specifically is you had the price hit, which was majority of our headwind, but you also saw some changes in in the DRG model that has impacted volume a little bit also. So I was actually in China last week. I spent a week there. I was over there over the weekend too. I had an opportunity to really go in-depth with all the different stakeholders. I think the team has done a really good job at navigating this. And I think that if you look at some of the dynamics that we're seeing in some of the accounts, we're starting to see a little bit now of some of that that volume start to re pick up. I'm not going to say that it's fully back, but I'm I'm encouraged to see some of the signs, start to pick up in terms of volume there. And if you look at how that happened to us, it really started happening in Q4 of last year. So we'll start to see a little bit of that headwind kind of that comp start to be minimized in Q4 This Year In China. And then next year, like I said, we've made changes. We've brought in new products, new management teams, etcetera. And I feel good about what I saw there last week, David. So I don't think that that's changing. And like I said, I think that's not a bad thing. We'll be lapping all of that, and we're seeing nice progress there. From the team too. I do think that the aspect that is changing is we are seeing our business outside of China continue to accelerate and that's going to be the other dynamic here to be able to move our diagnostic business from being you know, kind of low single digit growth, to now kind of mid single mid to high single digit growth next year. U. S. Has done incredibly well. I give a lot of kudos to the team there. They were up 10% this quarter. And that's driven by a lot of new business capture. So again, portfolio is very competitive. We got a large number of new business that we we last year, and continue to see new business converting to Abbott Laboratories this year. So I think share gains in The U. S. Is really what's driving that. European region did very well too. The quarter. I think they were up six to 7% they're doing very well also. Then Latin America, for us is, you know, growing mid teens, consistently growing mid teens here also. So I think the dynamic is not changing. So we're not seeing the situation get get worse in China. And I think the teams are doing really well there. We'll be out of that next year and outside of China. I think the dynamic going exactly how we've expected them to go, which is Alinity is being rolled out. It's a very competitive system. The are hitting their stride here in various important geographies and like I said, I expect that to continue. So you put you put that combination together, David, of passing the headwinds of the VBP in China, and continue acceleration in the on all the other geographies. I I think diagnostics is set up for a nice for a nice recovery year next year.

Very helpful. And maybe just one follow-up here on on the P and L. I think in the gross margin line, there are probably a lot of moving parts as quarter around the first quarter burdening the impact of tariffs and then also probably some foreign exchange related dynamics on a move in the euro, for example. Can you maybe help us decompose a little bit sort of the operational performance in the P and L from some of those other other factors and how we should think about margin trajectory on a go forward basis?

Yeah. I'll ask Philip to take that one, Philip.

Yeah. Thanks, David. And and I think you touched on on the right elements there. Gross margin continues to be a key area of focus for us. We've spoken the past of the dedicated teams that we have, in each of our business that that drive the constant ideation and execution throughout our supply chains and operations, even our affiliates. And, you know, that's progress that we to make good traction on here. The step back that you referred to here in Q3 sequentially, certainly reflects a normal pattern that, we have more of our plant operational maintenance shutdowns that occur in the third quarter. So that's a a normal sort of phenomenon. Also, as you touched on, the first meaningful impact of of tariffs that we're feeling in in gross margin is in the third quarter there as well. I would say we've done a really nice job in terms of the the team that I chartered to work on on tariff mitigation. And so you know, we continue to make good progress there and implement ideation not only on on how to improve that impact going forward. But also the teams generating ideas to pass over to the gross margin expansion teams and so continue to feed that funnel. And I think we are kind of on track with year to date 60 basis points of gross margin expansion and comfortable that that pattern will continue here and and kind of maintain that sort of 57% outlook in the profile going forward.

Thank you very much.

Thank you. Our next question will come from Josh Jennings from TD Cowen.

Hi, good morning. Thanks for taking the question. Wanted to circle back on the EP franchise and the outperformance in March Sorry to get a little bit granular, Robert, but was hoping you could just help us better understand the drivers of the double-digit ablation catheter growth one and then sorry for three-part question, but, hopefully, there'll be pretty easy to digest. Second is is just, you know, I think the consensus view is that Abbott Laboratories' mapping franchise has been driving the double-digit growth this year to date. Maybe just help us understand as a competitive environment of mapping evolves, you know, how how you see the mapping franchise, performance in in 2026. And then just last and the third part, where do you where does Abbott Laboratories' CPFA penetration in The US and N O US by the time Voalte's launched globally? So I guess in 2026, do you think we we could be north of 80% in The US and and a little bit lower than that OUS? Thanks for for taking the questions.

Sure. Let me see if I can kinda go through all of them here on this think your first question was just what's driving the ablation, the double-digit ablation growth. That's significantly driven by international, as you probably would have expected Josh. So a big driver there, has been that. But, know, we've got good growth, good good mapping growth in The United States still. We still believe that we're the data shows that we're still market leader in in mapping cases. Obviously, with with other competitors launching, their mapping systems, We've seen an uptake, in in their mapping in their in in in the amount of cases that they're now mapping. Tied to their own catheters. So but even even with that, we we still feel that we've got a leadership position in the amount of cases that, that we've mapped, for We have added other products also that help drive our growth there. Again, this goes back to this understanding of all the different segments in the EP area. Catheters are important. They're a big segment of the market and so are diagnostics. But we've got other parts of the portfolio also that are driving driving growth. We recently launched a our 13 French digital sheets which is viewed as, you know, one of the best introduced, one of the best introduced to sheaths. For not only our product, but even for competitive systems also. So so that that helps also. We're launching, you know, ICE also. So that's also a driver. So I think, again, going back to my comment you gotta have a full portfolio here. And I think trying to pin it down to, like, is it mapping? Is it is it this? Yeah. I mean, obviously, we're tracking all those different segments, Josh. But, know, we kinda view it as looking at the amount of cases that we're doing and looking at it on a revenue per case. And our revenue per case is actually going up. As we're introducing more and more new products. To support those cases. So then I think your last question was about penetration of PFA. It seems like it is becoming the go-to energy source here. I think the numbers that you threw out there, sound sound reasonable. If you think about 2026, you'll now have all four manufacturers with with PFA ablation catheters, with mapping tied to PFA ablation catheters. So I think that think that number sounds sounds reasonable to me. And then internationally, yeah, it's a it's a little it's a little bit less, but we'll see. Yeah. We'll see what what will happen. I think that Volt could actually could actually change that dynamic And and and maybe it can lead to a much higher penetration rate in international markets, specifically in Europe that mimics mimics The US penetration. But it's not a bad assumption to have for now.

Appreciate it. Thanks, Robert.

Thank you. Next question will come from Vijay Kumar from Evercore ISI. Your line is open.

Hi, Robert. Good morning, and thank you for taking my question. I had one on maybe high level on China rate. I I I know there is know, outside of VBP, think some macro issues or challenging volumes. Right? So when you look at overall China, inclusive diagnostics and med tech and and and EPD franchise, Can you just remind us you know, what what China has done for you? Year to date? What was it last year? What is your view on normalized growth outlook for China? I think one of your peers just said that they expect the mid-teens organic growth outlook for China. I'm curious to hear, your view on China.

Yeah. Sure. Let because I was there last week, like I said, It's an important market for us. It's gonna continue to be an important market. But as the company has grown and portfolio and it's it's in our total revenue as percent of total revenue has come down a little bit. Right? So if you look at that China, let's say ten years ago, Vijay, it was probably close to, like, nine, 10% of total Abbott Laboratories revenue. Today, it's it's less than 6%. But it doesn't mean that it's not an attractive area of the world for us to continue continue to invest in and drive to. If you look at our EPD and nutrition businesses, those two businesses have been up double digits year to date. And the team has done a really good job there about building a portfolio and and taking advantage of of of the growing segments there that we can we can offer innovation and solutions there. Our cardio neuro business has actually seen sequential growth step up throughout this year. I think if you take out the real challenge for us has been obviously the piece. And that was one of our larger businesses in China before before the VBP. So Q3 decline was pretty much in line with what we saw in Q1 and Q2. So but if you if you remove that, I'd say our growth rate in China is around five to 7%. If you take out the diagnostic piece. And I think that that's probably not a bad place to be in. And as we expand the portfolio there, bring new innovations, I think that that's that's that's probably a good growth target that I look at for 2026. I I don't know who who you're referring to who's talking about mid-teens. You know, if you've got if it's a company that doesn't have a lot of business, then yeah, then then you've got opportunities to grow your position. We've got a lot of in China, and I I think that a growth rate of mid-single digits, at least how we're planning for, is how we built our how we're looking at our 2026. And and quite frankly, we look kinda go forward. So I'm placing a lot more emphasis on growth contributions from from other geographies. I think we've got a lot more opportunities than over here. But again, like I said, still remains an important market for us and we're committed to it.

That's helpful. And then maybe one quick one on of your I think CRM, now your fastest growing product line within within MedTech. And and that's kind of crazy when you think about diabetes and and, all the other, good things that's happening, can you remind us on on how big is this category, the dual chamber, needless pacemaker, And where are we from a penetration standpoint? What innings are we in?

Yeah. I'm gonna pick up on it's kinda crazy comment that you made. For us, it's it's actually taking a vision that we had, like I said in my opening comments, to to change the standard of care here. Make the investment that's been done. And I think now we're seeing the benefit It fundamentally changed the growth trajectory of our business You know, I'd say five years ago, our CRM business was was flat, flat business, then it moved to a, you know, mid single digit high single digit, and then this quarter hitting double digits. It it's it's it's pretty remarkable also, would say, given the fact that this has historically been a low growth market. So we're obviously taking market share. I give total kudos to the team in terms of how they went about this, all the way from R and D, operations, clinical commercial. I think they've done a really good job. And I think Avera is is just now really hitting its stride. And we're driving uptake in both single and dual chamber. I expect this to continue. I expect this type of performance to continue for the next two years. They've established a very large base of US physicians that are now implanting this. I'd say on the single chamber we're probably about 50% penetrated. And so there's still room to grow there. But half of our implants so far have been dual chamber and and were probably sub 10% penetration over there. And those those penetration rates are are are mostly US. So I think there's a lot of opportunity here for us to do this. And to live up to that vision. We've got great opportunity international too. We're seeing really nice momentum in in in Europe and Japan. And I think the long term aspiration here to be able to convert a significant portion of market. We we estimate the the the low voltage pacing market to be around $4 billion. We wanna convert a significant portion of that and and in doing so, become the market leader in this segment. So, and the team's done a really good job and there's pipeline. There's there's innovation, there's clinical work, there's investment behind it. So I got, it's not crazy to think about it if you look at all the work that the team has done and put forward, and, I think they're ready to capitalize on this. And they've got they have pretty high aspirations where they wanna take their sales and their market position.

That's very helpful. Thank you. Thank you.

Our next question will come from Danielle Antalffy from UBS. Your line is open. Hey. Good morning, guys. Thanks so much for for taking the question. Robert, I wanted to touch on the two questions, one on diabetes, one on structural heart. Just wanted to touch on the structural heart piece of the business. And specifically in left atrial appendage closure and how you guys are thinking about that has been a high growth market. It feels like you guys might not really be benefiting yet from the concomitant procedure. Maybe you could talk a little bit about how you see, left atrial appendage closure evolving for Abbott Laboratories specifically in in 2026 and beyond? And then just one quick follow-up on diabetes. Thanks so much.

Yeah. Sure. Listen. I think it's a it's a really important area of growth. You're right. I don't think that we've taken, the right amount of share with a concomitant procedure. I know that the teams are looking at at, you know, how to do that, more effectively. As we go into, beginning of next year. But this is an area that, we continue to invest in. I think that what I'm seeing right now from the results or at least feedback that I've heard from physicians on our next generation, AMOLED device is, significantly positive, versus what I've heard from other products that we put into trial. So when I get calls and texts and things like that from some of the KOLs that are working on the trial, Really making sure that we understand of how how and how good this next generation is. I think that's gonna allow us to do that. We've actually completed the enrollment of that trial, so we're gonna be filing you know, we've to do the follow-up and then we'll be filing in the first half of the next year. So we'll see if, if this is a, if this is a 2026 launch or if it's more of 2027 launch. But I think that's gonna be hugely important. And I think it's gonna be hugely important as it relates to our full portfolio here. We think that it's going to be a differentiator for us. To be able to have not all not only all the PFA tools and mapping tools and service and support, but now to be able to add a a a much more competitive device on the LAA side. We've got a read out of our trial, against NOAC. That'll be in 2027. I I understand that there'll be a readout from competitive system next year, but I think that this is a this is a high growth area and one that's got a lot of attention, from me. And from the management of our device teams on how we can kind of leverage, the portfolio better. So, I've got high expectations as we go into as we go into year and especially with the next generation product.

Gotcha. And then just the quick question on diabetes. You know, we've talked in the past about CGM becoming standard of care. And I'll be very honest. It it surprises me that we're still only 20% penetrated in The U. S. In basal. What do you think are still the barriers to this, and how how long will they persist? I mean, you talk to clinicians, and it feels like the momentum is there, and and quite frankly, we should be inflecting at this point, and I just can't tell if we if are. So just curious what you think is is maybe preventing that, or maybe you think we're in the inflection. I I don't know. I don't wanna be free open. Just if you could comment on that.

Yeah. I think it's it's it's difficult to generalize. Every market that we've seen on the Basal has gone at different different speeds. If I look at some of the European markets where we got full basal, It's actually gone, I would say, maybe at three quarters of the of the speed that the intensive insulin user kinda got picked up. And you're right, The US is a little bit slower. I think there is a large universe of primary care docs that needs to be covered. There's probably more awareness that needs to be built. I know you might think, well, there's just already a lot of awareness. How come it's not ascended? But still a lot of pockets around this country where, know, we're going in with our sales force for the first time. And, you know, there's a there's a very high level understanding of what CGM is. But there's hasn't been a lot of experience. So that's what we're working on, a lot of sampling, programs, I think the work that we did that the team did for epic integration in a more turnkey versus, you know, every different office doing their own integration. So to have it fully integrated into Epic, I think that'll be good. And I think the other thing, that is going to be important for the primary care doc, mean these are very fast visits Danielle. They don't have a lot of time. So I think they're starting to really the benefit of using ambulatory glucose profiles and look at those and be able to find out where the problem is, in that basal population. It's twenty percent. It's It's there are probably pockets in The United States where I've seen higher penetration. Rates, but that's okay. I think that what's important for us that we're continuing to see an increased sustained penetration. And I think that if I were to sum it up, it's probably more dependent on us than it is about concerns about whether there's value or not value. I mean, I think the clinical data is pretty ound in terms of the benefits that it has. So this for me is more about us doing better, investing more, covering more physicians, and that's what we're doing. Great. Thank you. Thank you.

Our next question will come from Joanne Wuensch from Citi. Your line is now open.

Thank you, and good morning. Two quick questions on nutrition, so I'll put them both up front. Could you give us an update please on where we're sitting on the neck litigation? Then it looks like there were some pockets of nutrition that were weaker this quarter than, we would have expected? And if you could just sort of address that and how you think about that going forward, that would be great. Thank you.

Yeah. Sure. On the litigation, you know, as I've done in the past, I'm not gonna comment on, you know, any of deep into any specific cases. I think you saw over the last couple of months, you saw, some of the, federal cases, go through go through the process. In both those cases, Abbott Laboratories won on summary judgment. So we stand behind I mean, I'll I'll just stand behind the products. I stand behind, you know, our label and and the importance of these products in the health care system. So we'll see we'll see more cases. Progress this year and and into and then into next year. There's there's clearly a difference in terms of how the federal cases are being looked at versus, maybe some, of those earlier cases, on the state are being looked at. But, yeah, we we remain we remain committed and will will you know, commit to, you know, defending the product and defending the use of it going forward. I think your other comment was pockets of softness in in nutrition. I'd say for me, think if you look at the 4% growth, it's pretty much in line with our kinda historical growth rate. I think the one that was a little bit off where we historically had been was in our U. S. Pediatric And that's just competitive competitive impact. We gave back some share, that we had captured last year when a competitor experienced a supply disruption. I knew it was going to be difficult to hold on to it, to hold on to it permanently. But still, I'm disappointed, that we saw that happen. And then on top of that, we also saw, a large WIC contract, state contract move from Abbott Laboratories to a competitor in in the quarter. So that so that had an impact over there. I I expect some of these, some of these share losses here that we've seen in The U. S. To impact our growth rate here. And The US pediatric for the next couple of quarters. But what I'll say is we faced this during the supply disruption in 2022 and we got our share back. It takes a few quarters but I'm, I'm, I'm very confident the team will be able to do that. First, because we we recently won two new WIC contracts The combination of those two contracts actually are higher than the one that we lost, but those go into into effect Q1 and Q2 Of Next Year. And Then We've Got Several New Product Launches That We'll Be Launching Here In The US, over the next couple of quarters. So it's gonna take a couple of quarters, but I'm I'm confident we'll be able to get our share back. Thank you.

Thank you.

Our next question comes from Travis Steed from BofA Securities. Your line is open.

Hey, thanks for the question. I guess kind of big picture, I wanted to talk about the sustainability of the device business. You've had kind of 10 plus quarters of double digit growth. Just trying to think about the sustainability of that going forward when you think about the procedures and underlying procedure market growth in the pipeline that you guys have? I just want to think about your view there kind of longer term.

Yeah. And I think, the way, our device portfolio has a evolved, if you look back five, six years ago, was a high single digit grower in the combination it was really you had double digit growth in diabetes and EP and structural heart and then you had say about it was about 40% of our revenue in vascular and CRM that was relatively flat. So, the way we've done this and I've talked about this also is okay, how do we ensure that the high growth areas continue to grow and accelerate? And that's what we're seeing in structural hardy and EP and diabetes, even in heart failure. And then how do we reposition what we would characterize as historically slower growth segments of a very large portion of our portfolio, how do we get them from being flat to at least growing mid single digits. And if you get them to grow mid single digits, then you then you move up to double digits. And that's what essentially has happened. If you look at our CRM business, I talked about this it's gone from being flat to now being double digit. That has a tremendous And I think that there's a lot of sustainability in that. And then in our vascular business, we started repositioning the portfolio I would say Vastr is on the same journey that CRM was on maybe maybe a year or so behind the boat. We're already seeing the impact We've been able to show pretty consistent delivery of 5% to 6% growth in our vascular business over the last year or so. So I think they're on their kind of journey to reposition the portfolio to higher growth. My expectation is is very sustainable We're in these very high growth markets. We have great portfolios. We've been investing, significantly and disproportionately in those programs product development, clinical trials. And so I think it's very sustainable.

Great. I wanted to follow-up on on some of the balance sheet and and m and a kind of a lot of cash in the balance sheet. You know, how do you think about the portfolio over the medium term? Do you have the right assets going forward in a new market you wanna be in? You know, at at some point, are we gonna see you guys kinda utilize the the balance sheet and and the cash?

Yeah. Well, we have been using it. We have been using it in terms of dividend and growing our dividend. We have been using it in terms of share buybacks. We've been using it in terms of debt and debt pay down. We've got $3 billion of debt, to pay down next year. And I think I'd prefer to pay that down when it comes due, but we'll we'll wait see what what interest rates look like. So we have been using it. We've been making investments investments, internal investments with manufacturing and some of our digital solutions. So, So yeah. I don't I don't I don't think that we've just been sitting on it. Obviously, we've businesses that are very strong positive cash flow generators. On the M and A side, yes, like talked about there being opportunities, very good opportunities out there. We've got a strong organic pipeline which allows us to be a little bit more selective. But there are opportunities that fit us strategically and there are a lot of opportunities that fit us strategically and make an can generate an attractive return. We've got capacity to do that too. So I like the position we're in but we are putting our cash to use.

Great. Thanks lot.

Yeah. Operator, we'll take one more question, please.

Thank you. And our last question will come from Suraj Kalia from Oppenheimer and Co. Thank you for taking my questions. So, Robert, structural heart continues to be an important segment for Abbott Laboratories in you talked about some of the new products on the Verizon balloon expandable valves, Cepheus, so on and so forth. Would love to get your thoughts specifically on the mitral and tricuspid US TAM The landscape seems to be changing with SGLT2 inhibitors cath lab capacity, and so on. What are the puts and takes for realizing this TAM? You for taking my questions.

I mean, I think there's a lot of opportunity, in in in those two products that you just referred to. I think on the on the on the tricuspid side, I'd say, what needs to be done here is continue to invest in data and data generation to be able to strengthen the referral pathways, to be able to have broader adoption. I think between, repair and replace good to have both those tools. Right now, what I'm seeing is repair is is being is being the preference, just given the safety profile. On the MitraClip side, we've invested in a clinical trial to look at using MitraClip in low and intermediate risk patients. So I think for those two products, you're going to have to, continue continue to invest in clinical and clinical evidence. Obviously you support that with your field based teams, etcetera, but I think the real big drivers of continued drivers of that are gonna be, clinical evidence. But I mean, I take a step back here and maybe just look at how you started your question about Structural Heart. You went quickly into those two products. But this is an area that if my view, if you wanna be a cardiovascular med tech leader, you have to have a strong robust, and differentiated portfolio and strong position, in Structural Heart. If you look at the revenue, across the players, know, last year, I think we crossed over to number two. So we have a number two position. And I don't think that's by accident. We've invested in that area. We've invested heavily in that area. We've got a portfolio of great products here, MitraClip, TriClip, you got Navitor, you got Amulet, and you've got several if I look at over the next couple of years, there are multiple catalysts here to sustain and even accelerate this double digit growth that we got, whether it's label expansions in Navitrol MitraClip, we we launched our fifth generation MitraClip and TriClip product. That's important We've seen guideline changes happen. Saw some of that guideline change happen at the European conference, about a month ago. Expanding the product and the technologies to other markets. I think the the the launch of TriClip in Japan is going to be a real important move for us. We've done some bolt on m and a in this space also. This quarter, we actually bought a an AI powered, imaging, software company in Europe, that specialize, in interventional cardio, pre procedure planning. I think that's gonna be hugely important in this space. So we've added to that and, you know, integrating that team in into our into our programs. And then the pipeline, like you said, whether it's Balloon Tavern, Ambulet three our next generation AMBLET, and, you know, our our mitral replacement valve. I think that's those are all, you know, I actually been pretty close. I've been closer to the mitral replacement program recently. And the feedback that I've heard from this product is just spectacular. And I think it's got the potential to live up to the expectation that we all had back in 2015 when all of us made significant investments in buying early assets and with the belief that my could be as big as TAVR. I think that this is the product that's going to it's got the potential to fulfill that promise. So I put all that together. I think that we're tremendously, competitive position in Structural Heart. Portfolio is very and we're gonna continue to invest in it and and be a leader here. So I feel good about that part of our med tech portfolio and be able to sustain that double digit growth going forward. So well, I I I realize we've we've hit our time here. Let me just make some closing remarks. Delivered another very good quarter. Year to date, we've delivered 7.5% organic growth, 10% EPS. Showing that we can expand our op margin profile. We've expanded that by a 100 basis points. And I think we've delivered all of that as I said, in in in in one of the questions here with some some larger than expected headwinds here that we faced in our businesses that we feel will be kind of behind us, next year. So our organic r and d engine continues to be highly, highly productive. And I expect that we'll be able to sustain this performance, this growth as we as we carry into 2026 and beyond. So with that, I'll wrap it up. And thank you for joining us today.

Thank you, operator, and thank you all for your questions. This now concludes conference call. A webcast replay of this call will be available after eleven a. M. Central Time today on Abbott Laboratories' Investor Relations website at abbottinvestor.com. Thank you for joining us today.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.