Good morning, and thank you for standing by. Welcome to Abbott's Second Quarter 26 Earnings Conference Call. During the question and answer session, you will be able to ask your question by pressing the star 1 keys on your touch tone phone.
This call is being recorded by Abbott. 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 It cannot be recorded or rebroadcast without Abbott's expressed written permission. I would now like to introduce Mr. Michael Comilla, Vice President, Investor Relations.
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 2000, including the expected financial results for 2026. Abbott cautions that these forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10 k for the year ended 12/31/2025.
Abbott undertakes no obligation to release publicly any 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's ongoing business performance. These non GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings news release regulatory filings from today, which are available on our website at abbott.com.
Note that Abbott 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 and without unreasonable effort the timing and impact of certain items, which could significantly impact Abbott's results in accordance with GAAP. Unless otherwise noted, our commentary on sales growth refers to comparable sales growth. Our definition of comparable sales growth can be found on Page 2 of our press release issued earlier today.
And a reconciliation table containing the data needed to calculate comparable sales for growth can be found on pages 16 and 17. With that, I will now turn the call over to Robert Ford.
Robert Ford
President & CEO
Okay. Mike, good morning, everyone, and thank you for joining us. Today, we issued second quarter results that included sales growth of 4.8% which represents an acceleration compared to the previous 2 quarters.
And adjusted earnings per share of $1.31 which exceeded the midpoint of our guidance range and the consensus estimate, Considering our second quarter results, and updated outlook for the remainder of the year, we are reaffirming our full year guidance for comparable sales growth of 6.5% to 7.5% and raising our EPS guidance range to $5.45 to $5.60 Before summarizing our second quarter results, I want to highlight a few recent pipeline achievements, including completing patient enrollment in our tectonic coronary IVL pivotal trial, completing our FDA submission for approval of our new Amulet 360 left atrial appendage device obtaining CE Mark for Libre Duo the world's first dual glucose ketone monitoring sensor designed to detect rising ketone levels and help prevent diabetic ketoacidosis. We anticipate launching these 3 new products. Along with our Tactiflex Duo PFA catheter in the US at a steady cadence over the next 12 months.
We also remain on track to begin patient enrollment in the fourth quarter for several important clinical trials that will support a steady cadence of future product launches. And these include a balloon expandable TAVR valve, a leadless conduction system pacing device, leveraging our Avera pacemaker, a mitral replacement valve developed following acquisition of Cephea Valve Technologies. A peripheral IVL device developed following the acquisition of CSI, and a wearable continuous lactate monitoring sensor designed to reduce the risk of sepsis following discharge from the hospital.
I will now review our second quarter results in more detail before I turn the call over to Philip, and I will start with diagnostics. Diagnostic test results inform approximately 70% of all health care decisions. Making testing volumes a reliable barometer of overall health care activity and demand.
Our test volume data that is sourced directly from our diagnostic instruments located across the United States and around the world continues to reflect strong and stable demand for testing. We view this as a positive indication of the durable underlying demand for healthcare, not just in the US, but globally. This durable demand was evident in our core laboratory results this quarter where US business grew 7.5%, and we continue our track record of strong performance across Latin America.
In rapid and molecular diagnostics, sales declined 8% driven by the anticipated decrease in respiratory testing, as a result of a weaker than normal season that concluded during the second quarter. In cancer diagnostics, sales growth of 13% was driven by mid teens growth of Cologuard. Which is benefiting from a growing base of both new and repeat Cologuard users as well as contributions to growth from our precision oncology and international business.
We continue to expect cancer diagnostics growth in the second half of the year to be higher than the first half of the year to be higher than the first half supported by increasing volumes from care gap programs, recently launched tests, and continued international adoption. In May, the American Cancer Society updated its colorectal cancer screening guidelines reaffirming Cologuard and Cologuard Plus as preferred screening options. This designation reflects Cologuard's market leading accuracy and superior ability to detect cancer at earlier stages compared to other available tests.
Moving to nutrition. Where sales finished slightly ahead of our expectations for the second consecutive quarter, Sales increased sequentially by $125 million. Driven by improving performance in both pediatric and adult nutrition.
In pediatric nutrition, our adult in pediatric nutrition, our international business was the first of our nutrition businesses to transition back to delivering positive growth delivering growth of 6.5% in the quarter. In US pediatric, we exited the quarter with the full benefit of recent WIC contract wins reflected in our run rate. And as a result, Abbott is now the market leader in both WIC and non WIC segments.
In adult nutrition, we continue to see positive volume trends in response to the price actions implemented late last year. In the U.S., retail consumption of insurers increased double digits compared to consumption levels exiting last year. And achieved the highest year over year consumption growth in the past year and a half.
We are also making good progress in our international adult nutrition business where sales continue to grow sequentially and are now approaching levels similar to this time last year. We are also benefiting from sales contributions from new innovation, including new versions of Ensure that feature higher protein, lower sugar, and refreshed labeling and packaging. So overall, I remain encouraged by the progress we are making and confident in our outlook for the second half of the year.
Turning to EPD. Where we continue to deliver consistently strong performance. Sales grew 9% in the quarter reflecting broad based growth across our largest markets, including India, Latin America, and Southeast Asia.
This performance reflects a disciplined execution of our teams and the growing demand for healthcare in emerging markets. This demand is a result of evolving market dynamics, including expanding access to health care, aging populations, and a rising need to treat both acute and chronic conditions. These structural tailwinds combined with our broad portfolio expanding pipeline of biosimilars and strong brand equity position EPD to sustainably deliver high single digit sales growth.
And I will wrap up with medical devices where sales grew 8.5% Growth of 8.5 percent in our cardiovascular device portfolio was led by low growth in electrophysiology and high single digit growth in rhythm management heart failure. In electrophysiology, the second quarter marked beginning of an acceleration in our growth trajectory. We launched our next generation Bolt PFA catheter, commonly referred to as Bolt 2.0, in the US in May, and we expect to transition from limited market to a full market release in the third quarter.
Internationally, the expanding rollout of Bolt and Tactiflex Duo is gaining strong traction. Driving growth of more than 20% in Europe. Remain confident in our outlook for the second half of the year, including our expectations to begin outperforming the market and recapturing share.
In Rhythm Management, sales grew 9.5% as we continue to expand the use of Avera across both the single and dual chamber segments of pacemaker market and to drive broader adoption of this innovative technology In heart failure, growth of 9% was led by double-digit growth in the US, driven by our market leading portfolio of heart assist devices that address both chronic and acute patient needs. In diabetes care, continuous glucose monitoring sales exceeded $2 billion, reflecting growth of 9.5% in the quarter. In May, we secured CE Mark for Libre Duo, the world's first dual glucose ketone wearable sensor.
We will begin the international rollout of Libre Duo in the fall and we look forward to bringing this innovative new technology to the United States market After we obtain FDA approval. So, in summary, we remain highly focused on disciplined execution in each quarter. Our second quarter results represent an important building block as we move into the second half of the year.
We have momentum building across the portfolio and have a clear line of sight to the key drivers of sales growth acceleration that are forecasted in the second half. Our continued focus on gross margin expansion gives us confidence in raising our full year EPS guidance. And we have several new products that we anticipate launching at a steady cadence over the next 12 months.
I will turn the call over to Philip.
Thanks, Robert. As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on a comparable basis. Turning to our second quarter results, sales increased 4.8% on a comparable basis and adjusted earnings per share of $1.31 exceeded the midpoint of our guidance range and the consensus estimate, Foreign exchange had a favorable year over year impact of 0.8% on second quarter sales, which was a slight improvement to our expectations at the time of our earnings call in April.
Regarding other aspects of the P&L, the adjusted gross margin profile was 58.0% of sales, representing an increase of 100 basis points compared to the prior year. The improvement was broad based, reflecting favorable business mix within the legacy Abbott portfolio and from the addition of Exact Sciences as well as the continued operational improvements and discipline of our margin expansion initiatives. Adjusted R&D was 6.9% of sales, and adjusted SG&A was 28.6% of sales.
Based on current rates, we expect exchange to have a positive impact of 1% on full year sales. Which includes our expectation for exchange to have a negative impact of approximately 1% on third quarter sales. For the third quarter, we forecast adjusted earnings per share of $1.38 to $1.46 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 then hear an automated message advising you that your hand is raised.
To withdraw your question, please press 1-1 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 is And our first question comes from Robert Marcus from JPMorgan.
Your line is open.
Great. Good morning. Thank you very much for taking the questions.
Robert, if I may, 2. 1, a market question, 1 an Abbott question. And if I start with the market question, I think a theme that a lot of investors are focused on given some of the negative preannouncements out of the hospital sector is the potential for decelerating procedure volumes particularly in the US? We heard from J and J yesterday that they are not seeing any sign of that.
We heard from you this morning particularly on the diagnostic volumes where you have a great view into forward looking volumes it sounds like you are not seeing anything. So I would love to hear your view on the health and the forecast of procedure volumes in the U.S. and what you are seeing in expecting?
Robert Ford
President & CEO
Sure. I mean, that seems to be a topic of concern for investors I think it is less of a concern for it is less of a concern for the companies. I think at least the companies that are in the markets that, you know, that we are operating.
And I think there is a couple reasons for that. I mean, I think some of the concern for the decline in volumes is tied to kind of challenges with the ACA, lower enrollment rates or disenrollment rates in Medicaid, And I think that is a I think that is a flawed assumption, Robert, as it relates to the med tech diagnostic space. If you go back to when the ACA was implemented, really, pharma companies that predominantly benefited from new patients coming into the market.
We did not see that in med tech or in diagnostics. We did not see a spike in demand when the AC and the expansion of Medicaid So I think it is logical here to assume that if we did not we did not see the benefit, I do not think we are gonna see downside if that truly is what is happening. And I think 1 reason for that is that it is not Medicaid that is a driver of med-tech surgical procedures in the United States. it is actually Medicare.
Medicare is by far the largest US payer as it relates to as it relates to devices. For us, you know, it is over it is over 2-thirds of our of our US cardio business. So I think that is 1 reason.
The other reason I believe it is not a concern, at least right now, I do not not seeing it, is that not all health care products are the same here. Right? So demand for demand for, say, like, high acuity, life saving products is very inelastic.
In The US, we treat people with serious acute medical conditions and the system does not save lives of only those people with insurance, right? And that is why we did not see the impact of expansion of ACA and Medicaid into the business because those patients were already being treated. And then if you look at our portfolio, it is it is really tied, and maybe this is a little bit more of a-- more of an Abbott side.
We are really tied to a lot of major chronic conditions like diabetes, cardiovascular cancer, this is less likely to forego insurance. So I think that is 1 reason. I think the other reason is our data is not showing that Robert.
And I am I am not referring just to our weekly sales and things like that. it is just looking ahead. I think 1 of the benefits of our diverse model here is that it really provides a pretty holistic view of the entire health care system, not just in the US but globally. And, yeah, I think as you mentioned, my prepared remarks, you know, we look at our diagnostic business as not obviously a great business to be in, but it also provides us I think, forward looking into the healthcare environment and the healthcare system And our instruments are located across the world, across the country, all in all in all the states here in the US.
And testing volumes in the US have held up very well. Not seeing a decline, including in The States that we have seen the highest level of ACA disenrollment. So we have we have gone as deep as looking at it.
From that perspective. Our US Core Lab business has accelerated growth in the last 2 quarters. Our print here is about 7.5% this quarter.
But if you unpack that, we have got a couple different segments in our US Core Lab business, Robert. Labs, and then specifically hospital labs. So these are our business of selling instruments and reagents specifically for hospital and in hospital testing that business was up 13% this quarter.
So I think if I look at if I look at the diagnostic system as a as a forward looking there. We are not seeing that. We are seeing strong demand for our US business.
I would argue that our US cardio business is performing better than it is ever been. And we are seeing that same similar strong stable demand internationally, both in developed and emerging. So I feel very good about overall health care markets and especially our markets.
I think I think I said this publicly about a month, month and a half ago. Dynamic. I mean, every day in the United States, you have 10 thousand people that turn 65.
And age is a driving factor of healthcare. So I think this aging population is a global dynamic and I think the demand is right now, we do not see it as a concern. Well, that is great to hear.
Robert, just a quick follow-up, 1 Abbott specific. It was good to see a small beat on organic sales in second quarter The forecast includes an acceleration in third and fourth quarter Just would love to hear how you are feeling about the confidence level in that acceleration in the second half and if you do not mind just highlighting some of the key growth drivers that get you there?
Thanks a lot.
Robert Ford
President & CEO
Sure. Sure. Well, I am feeling very confident, as I have said.
But that feeling confidence is really driven by a lot of hard work that the team is the team is doing. I think Q2 results showed that we have got momentum that is building. Our growth rate stepped up.
To mid single digits from where it was in the last 2 quarters of low single digits. Sales dollars, sales growth rate, all of that accelerated each month during the quarter. So as you look to the second half, you have got a lot of businesses.
I am sure we are going to touch on a lot of them here, but a lot of businesses that are doing strong growth rates and we forecast to continue to do those strong growth rates. But the lift in the second half 80% of that lift, I am gonna call trajectory shift, really coming from 4 areas. Nutrition, electrophysiology core lab, and cancer diagnostics And each of these 4 businesses are entering with a lot of a lot of momentum and line excite and line of sight to the to the drivers of the business.
And I am sure we will we will talk double click on all of them during the call here. But listen, the Nutrition is tracking slightly ahead of expectations. Several of our strategies, whether it is pricing, new product launches, commercial execution, that is all that is all being done very well by the team.
NEP, we have got a lot of a lot of great launch activity, lot of good feedback on our new products. So I expect the second half of the market to really show the that growth acceleration that we have been forecasting. In our Core Lab business, listen, our businesses have performed very well across the world.
We obviously had the challenge of the VBP in China where he had a pretty a pretty sizable portion of our international business decline for at least 5 quarters around 30%. We are still forecasting a decline in the China business, but much, much lower, mid single digits So that allows some of the other businesses that have continued to do very well and actually accelerate to kind of overpower that China impact. And then cancer diagnostics, very good.
Very good trajectory there, especially with new Cologuard users. They are exceeding our expectations. And I have learned a lot about these Caregap programs.
I got confidence in them. We have got a lot of, a lot of work, around them. And, so I am I am confident in that.
So it is really those 4 businesses that represent the significant shift. Obviously, all the other businesses have got to continue to do well, and they have got all their strategies. But if I were to kind of really focus on what is gonna drive that second half, it is these 4 areas here, and they are actually going into Q3 with a lot of good momentum.
Some of them a little bit ahead of what we thought we would be at. So we feel good about that second-half acceleration. Great.
Thanks for taking the questions.
Thank you. Our next question comes from Larry Biegelsen from Wells Fargo. Your line is open.
Good morning. Thanks for taking the question. So, Robert, you know, I would love to double click on, on Libre If you could talk about the Libre trends in the US and international, you know, I think you only reported worldwide growth of 9.5%. what is the outlook for the CGM business for the remainder of this year?
And what is your latest thinking on the US timing for the dual key glucose sensor and type 2 non-insulin coverage? And just lastly, can these accelerate your CGM growth or just maintain the current rate? Thank you.
Robert Ford
President & CEO
Sure, Larry. I loved your characterization of only 9.5% on a $2 billion quarterly business, but I get where you are coming from because we have had higher growth rates So I get that. I understand that.
Let me see if I can unpack this a little bit so you can so we can kind of all get centered around this very important market of ours. and how we see it. I will get to all your questions, but let me just kind of talk about this And I have said this a couple times on other earnings calls remain very bullish about this market, Larry. As I have said in the past, you have got 75 to you have got 75 to 80 million people around the world that could realistically be on a CGM and you have only got 15 million so far.
So there is still plenty of opportunity for growth and growth and growth acceleration. And I think it is very sustainable. there is a lot of building blocks to be able to unlock that opportunity. I would say the number 1 or the 1 that we have seen that has the most immediate impact and pretty significant to unlocking these opportunities is really reimbursement expansion.
And we have a lot of reimbursement expansion opportunities in the funnel. We are in active discussions with a dozen or so countries that are either looking to introduce or to expand reimbursement. And the reason we are having these discussions to expand or introduce these categories or expand the category is because of the robust clinical data that is been developed over a decade with technology.
That supports widespread adoption. We have generated data that shows that our competitor has invested in generated data that supports that. And the data is pretty resounding.
It lowers A1Cs, it reduces hospitalizations, people spend more hours per day in a normal glycemic range and that has measurable outcome discussions with the healthcare system. The challenge, Larry, is actually trying to pinpoint the exact month or quarter as to when that reimbursement expansion is gonna happen. Like you mentioned, the US.
I am going to be talking about that. But it is difficult to forecast that. I would say it is easier to forecast the conversion of an existing eligible reimbursed patient population the penetration of the technology, and how that runs than it is to try and pinpoint when these reimbursement expansions happen.
And I think when you go through a period of time like that, without a major reimbursement expansion, you see this kind of market growth plateau. And when I say plateau, I am referring to like 8%, 9% growth, which like I said, I do not think is a bad it is not a bad growth rate. it is just not as high as what we have seen before. And to your point on does it do these things keep you at this growth rate or does it accelerate It drastically accelerates it.
Right? Like any 1 of these markets that goes to reimbursement expansion or introduction of reimbursement it dramatically accelerates the growth rate as we have seen in the past Larry. And you have accompanied this segment.
It has significant impact. The challenge is not if these countries adopt it the question is when and how to forecast it. And it is difficult for me to, you know, with a business of this size to try and pinpoint the exact reimbursement.
But I can tell you, we are very active and active discussions with very large markets. To expand or introduce reimbursement. If I look ahead at some of the key reimbursement expansions that are coming, obviously The US type 2 is a huge opportunity. it is going to unlock around 10 million Medicare beneficiaries. it is gonna accelerate commercial insurance coverage This could be a multibillion dollar opportunity, and it could happen in the fall.
I just cannot forecast it exactly when exactly it is gonna happen, but when it does happen, it is gonna definitely accelerate our sales. And we are planning and positioning ourselves to be in the best possible position as it relates to Salesforce, distribution, etcetera. To be able to capitalize on that opportunity.
The international basal coverage expansion I mean, right now, with all the with all the work that we have done, I would say you have got France, you have got Japan, you have got Canada that have broadly adopted this. You know, those are 3 markets that are in the top 10 international markets. There are another 7 markets here that are pretty significant movers, some larger than these that we are having discussions And given the clinical data, given the pressure from the societies and the patient populations, You know, those are gonna happen also.
I just cannot call it to the exact quarter. So these reimbursement opportunities, they are going to accelerate it And until that happens, I guess I would say, yeah, you are at this you are at this like, 8, 9% growth rate, which on a $2 billion or, you know, approaching $10 billion business, that is not a bad business to be in. And I would say we feel so strongly about this market and the ability for this market to accelerate and to grow and the potential that exists that, you know, we are probably in the final stages here of, planning for a fifth manufacturing facility.
You know, we got our facility up, our last facility, our fourth facility. We got up and running probably in the 2024 time frame, given the trajectory that I am seeing right now. You know, that is a 100 million sensor facility.
We are probably gonna be bumping up against capacity at that facility probably in the next couple of years. So we are already looking at our fifth facility at it will probably be a billion dollar investment that, you know, we are right now, we are looking at where we are make that investment, whether it is going to be in the United States or internationally. If it is going to be in the United States, what state we are gonna do.
So we feel good about this market, Larry. And we have got plenty of growth drivers here. I would just go back to--you have got 80 million people that can use this product, and clinical data suggests that they should be using the product, and the health care systems will benefit when they do use the product.
And currently, we are at 15. So I feel very good about feel very good about our business and about our position. Regarding I think you had a question about, well, you had a question about timing of CMS expansion.
I think I answered that. And then timing on DGK in The US, because I am not going to try and forecast that 1 either. But what I will say is that the discussions are in, I would call, very, very advanced kind of final stages.
And, not gonna try and forecast that. As soon as we have it approved, we will issue a press release and we will go and start preparing the market. But we are hearing great things from already from some of the from some of the European positions that have had some early access to the product.
So we feel good about that. And, you know, we got a lot of product innovation coming too, Larry. I mean, I know there is a lot of focus here on DGK.
We probably had 2 more programs that I am not gonna talk about for competitive reasons here, but that is gonna be another driver of growth for ASUS. So again, I feel good about this market, we are making the investments, We believe in the growth trajectory and the potential that exists in it. And, you know, we are we are we are full speed in execution.
Robert, thanks for the comprehensive answer. Just to set the record straight, I would say you only reported worldwide growth. I was not criticizing the 9.5 percent, but, I just wanted to be clear about that.
So but thank you for the comprehensive answer.
Robert Ford
President & CEO
You can criticize, Larry. that is fine. We are-- this is a good business, and it is doing very well. I know it gets a lot of attention for you know, because of us and the competitor, but it is a good business. there is lot of opportunity here.
I am just trying to provide context of the opportunities and how this will accelerate, given reimbursement expansions. Understood. Thank you.
Thank you. Our 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. Hey, I wanted to dive a little bit on Exact Sciences.
The business did, to your point, slightly north of 13%. I think you are assuming a step up in the back half, maybe 16, 16 plus. And a lot of that is driven maybe some of that is pricing, some of that is care gap.
So my question is, how much visibility do you have on these Caregap programs in the back half stepping up for Exact Sciences? And I think a related question was, the FREE NOM just presented their redo data. Advanced adenoma detection rate was north of 18%.
I think that is well above your competition. So when you think about the blood side of you know, CRC screening, do you still expect Abbott to be the market leader on the blood side even though your entry into the market will be slightly behind, Garden. Thank you.
Robert Ford
President & CEO
Sure. Yeah. We grew 13%, in the first half.
Our deal model, that we put together to support the acquisition, for 2026 had mid-teens. I feel confident that we will achieve that. You know, the model called for second half being higher than first half and the integration is going very good, very well.
We are not seeing any kinda issues or disruption. I am I am just very impressed with the team there and their understanding of the market. And they have done a good job here at making sure that I understand all the different, detailed kind of elements of how this market works and drives.
To your point of the care gap, care gap volumes ramp in the second half. And that is what is gonna help drive. it is not just that, but it is contributing factor to the acceleration in the second half. Caregap programs really are they help the health systems achieve their HEDIS credit, their CMR star ratings, And that focus from the healthcare systems for some reason, tends to happen in the second half.
So they are they are looking at their scores. They are looking at their, their ratings. And they are looking at ways that how they can ensure that they are they are achieving their targets.
That seems to happen a lot in the second half. Do we have visibility? Yeah.
We absolutely have visibility. We have, you know, the is an incredible team there in terms of their market access team. They have got work to do. there is no doubt.
But there is a lot of visibility, to those programs, and there is a lot of discussions that are happening with health systems. They are seeing a need to continue to push on earlier detection of Cologuard. So I feel good about the ramp up of the Caregap and the visibility to that.
You mentioned price being an element there. So as we transition from Cologuard, Cologuard Plus, that is a little bit of a tailwind also. But I think there are a lot of key growth drivers here in the medium long term Vijay, and they are all looking very good.
If you look at the growth from Cologuard users, they are they are exceeding our expectations. So there is a certain forecast of how many new users we will be able to bring in and the team of actually exceeding that target. The number of repeat users in Cologuard we talked about, the screen.
That funnel is expanding and it is extremely, reliable in terms of know, since we have the names, people wanna stay up to date with their screening. So that rescreen funnel is expanding and that is a great driver for us. Obviously, CancerGuard, we are investing in that launch.
We are gonna be reviewing some of our next MRD, next generation MRD data will be coming out also. there is international expansion. I have been involved in some of the discussions around that, and, we are gonna be making some pretty interesting progress there with certain governments. And then to your point, the ability to add a blood test to the portfolio is gonna be, I think, extremely attractive for us.
Now, as you know, blood tests, you know, they are obviously very a little bit more convenient, I think Cologuard is pretty convenient, but, is a little bit more convenient than that. But it has a problem, which is it does not have the same sensitivity as it relates to detection of precancerous polyps and earlier stage detection. Right?
And when you think about screening, that is that is super important. So I think we will be the only company, say, will you be a leader in blood? I do not actually see it like that, Vijay.
I we wanna continue to be the leader as it relates to screening, and now you are gonna have a company that is gonna have the opportunity to not only offer best in class best in class stool test, but now we will also have a best in class a best in class blood test. And I think there might be opportunities. I think as you saw some of the guidelines come out from the from the American Cancer Society, there is a preference and a drive towards Cologuard.
But if you have got-- you still have a lot of patients that are not up-to-date with their screening or have not done screening, whether it is colonoscopy or Cologuard, and that will be an opportunity for us. So that will be a new market. And, you know, I think the way I view it is, okay, we will bring these patients into, these consumers into our screening funnel and then we will be able to educate them on the benefits of Cologuard.
So I think we will be in a great position as it relates to being the only company to have both stool and blood be able to kind of support the health systems with that even with that precancerous detection being lower than Cologuard, you know, doing blood test if you are not doing anything is probably a good first step, but then you wanna actually start to do it with a Cologuard test. So again, I see a lot of great opportunity in our cancer diagnostic business. The integration is going very well.
I can to be very impressed with this team, and their understanding of the market that they have built, and, and their plans to continue to drive it.
that is helpful, Robert. Thank you.
Thank you. Our next question will come from Matt Taylor from Jefferies. Your line is open.
Hi. Good morning. Thanks for taking the question.
I thought it would be worth spending a minute on EP given you have this nice series of launches here. You seem to be gaining traction with Volt already. Could you comment on market dynamics and your aspirations in the market, maybe just talk about how you think the AF market will continue to grow and you are committing to growing above market in the second half.
Could you talk about how that could continue into next year and the kind of share aspirations that you have?
Robert Ford
President & CEO
Sure. I am not gonna give specific targets on share. I think where I will leave it right now is, we do expect to grow faster than the market.
And I think we are entering this phase here where we will start to outperform marketing capture share. I think we saw early signs of that in '2, Matt. Sales increased every month in the quarter, very good progress there.
But I think what we will really start to see that happen in the second half, as we transition from a limited market release to full market release of Bolt in the US and then continue to roll out Tactiflex Duo internationally. We continue to get very good feedback from physicians and doctors around the world that are using the product. I would say Bolt.
For Melissa, what I hear a lot about Bolt is just the continued integration to the Mapping System And Not Having To Use a mapping system or a mapping infrastructure that is a little bit subpar Versus Where The Market Leading Mapping Systems Are. So Now You Do not Really Have To take that step back a little bit. You have got A You have Got A PFA catheter that is got very good mapping integration.
Opportunity, Especially Here In The US, I keep hearing that for ASCs and ASC adoption. Given the open footprint of the mapping system and ability to do these cases with general sedation. just with sedation versus general anesthesia. So those are kind of the and then, you know, the ability here given the given the contact, we have got to prove this out a little bit, but given the contact integration with mapping and the visualization of that ability to deliver better outcomes by producing more durable lesions.
So Bolt is getting great feedback We feel good now that we can move to full market release. Tactiflex Duo, you know, is coming On The Chassis Of A Of A Very Well Liked And Catheter In The Tactiflex Chassis. So that is Been Recognized For Ease Of Use, Versatility, Pretty Seamless Transition Between PFA And RF.
So Seeing Nice Share Capture Trends In Europe. Our EP business was up 20% in Europe in the second quarter, so that is good. I have high expectations for both these catheters, but as I have been pretty clear over these last couple of years, you know, our growth strategy is not gonna be built off, like, 1 product or 1 catheter that we have got to kind of monitor closely and see, you know, like, yes, these catheters will drive a lot of growth, but we are we are in the we believe that our right growth strategy is to really focus on selling the entire procedure.
And that is why we have been focusing on not just on these PFA catheters, but also on the mapping systems, all the ancillary, the diagnostics, the introducers, the ice catheter. I mean, all of that matters. And that is what our focus is here is to really position ourselves as a as a as a leading company, in this space And we have got a nice pipeline of PFA catheters still in the works So between now and 2029, we will have iterations and new versions and new ideas come out.
But, we are also equally investing in mapping and ensuring that our mapping superiority, is maintained. As obviously competitors are launching their own mapping systems. So we will continue to invest in that also and our ability to stay ahead is, I think, very strong.
So I think from a forecast perspective, I expect global EP growth to accelerate. it is in the teens right now. It will accelerate in the second half. For sure and outperforming the market.
And I expect that momentum that we are building this year to carry through to next year. And I think we will get an additional boost, into this EP portfolio. With our new LAA device I think feedback there has been extremely positive.
And we filed with the FDA. I think here, I will probably feel a little bit more comfortable saying, yeah. I can see if I can see a potential to be able to get this approved by year end.
And then with that, we will have strong momentum going into next year with both rollout of Tactiflex Duo in The US continued acceleration of Bolt in the US, launching our next generation LAA device also. So I see that momentum continue into next year.
Great. Thanks so much. Yep.
Thank you. Our next question comes from Travis Steed from BofA Securities. Your line is open.
Hey, Robert. Thanks for taking the question. I guess as we move into the second half of this year, investors are going to start looking more into next year.
Just curious how you think about the Abbott portfolio in the next year if this is like kind of a year that sets up for better growth. You have got easier nutrition comps, expanding coverage in Libre. You talked about EP accelerating in the next year.
Amulet 360 launching at the beginning of the year. Just curious at a high level how you kind of think about the Abbott portfolio in 2027 and its growth?
Robert Ford
President & CEO
Sure. I mean, it is a little early to give exact guidance for 2027. But you know, listen.
We have a, a target always of targeting high single digit growth, on the top, double digit on the bottom. I previously referenced 7% as a as a very kind of sustainable growth rate. I believe 7% is still the right target.
Despite there being a much larger base today versus where we were several years ago. it is probably only I think I looked at this as only like 5 healthcare companies with sales over 30 billion that are growing at least 7%. So I think I think we have a differentiated portfolio here, a very resilient portfolio. And I think, as I said, the strategy here of what we have been doing over the last couple quarters to get us in back into that, into that, 7% top line growth rate.
I think it is really driven, Travis, by looking at the portfolio and then the-- if I look at, you know, the 4 segments, again, I am not providing 2027 guidance, but when I look at you know, each 1 of them and their ranges, you know, nutrition, you know, has been a 2% to 4% grower, and I think that is probably, as we think about it going forward, that is probably the right range to be thinking about. Our diagnostics portfolio with the with the addition of Exact, the VBP impact in China subsiding a little bit is now a 7% to 8% kind of range that we think about. Our EPD business has reliably done this for, like, 5 years, like, 7% to 9%.
And med tech, you know, we view as kind of an 8% to 10% grower. So, you know, the low end of that range is around 6.5%. The high end is around 8%.
So I think 7 is a is a is a is a pretty sustainable kinda growth rate going forward. So and that is what we are that is what we target high single digit, double digit EPS growth. And I think we are well positioned executing what we are executing in the second half And the portfolio we have, I think I think the sustainability of that 7%.
And then obviously all the pipeline. I mean, we have got programs that we are gonna start in Q4, at least from a trial perspective, that are gonna start to deliver contributions in 2029-2030. So, yeah, we are thinking about 27, for sure, but we are also thinking 2028, 2029, and 2030.
What are the things that we need you to be able to of sustain that top line growth rate.
So that is great. Thanks a lot. Yep.
Our next question comes from Josh Jennings from TD Cowen.
Hi. Good morning. Thanks for the question.
Wanted to just ask on the structural heart unit. I mean, I think your team's been pretty clear that it may take some time for The US franchise to regain its foundation. But any help just thinking through some of the strategic initiatives either on the commercial infrastructure side, pricing, in front of some of the innovation that you have talked about, Robert, with the balloon-expandable TAVR and the mitral replacement valve that is in development.
Just help us think through when can the Structural Heart franchise start to see improved growth in trends. Is that 2027 into your answer to when you ask questions on the 2027 outlook, I mean, maybe soft comps for 2027 can Structure Heart get back in the groove next year? Thanks.
Robert Ford
President & CEO
Yeah. Listen. I expect structural heart by the end of the year to be in that kind of mid- to high-single-digit single digit growth rate back to where we were before.
I think that, you know, I have been I have been pretty clear about where we are falling short. it is not a price issue. it is not a product issue. it is really kinda how we think about, you know, how we think about competing in the mitral space, specifically in the US. I have seen competitive intensity increase there in that here in the U.S. and I mentioned that during our last earnings call. I said it was gonna take us a couple quarters, you know, Q2 is the first 1.
But I think by the end of the year, I think you will start to see that start to change. We have made changes. We made personnel changes.
We have also looked at how we are approaching the market. it is not a pricing thing. it is just more about how we think about we have we have 1 of the most comprehensive and broadest portfolios, in Structural Heart. And I think that our team is kind of trying to figure out a better way of how to position that full portfolio. You know, we are showing good growth in Tricuspid.
We are showing good growth in TAVR here in The US, but we have gotta do a better job. And Mike and the team knows that. They are motivated.
I have I have met with them, and they are determined to respond to the challenge. So US has got some work to do. We have had a lot of work this quarter.
I expect it to be a lot of work in Q3, and I think you will start to see You will start to see that change in Q4. I will put a plug in for the international team. I mean, the team has been able to grow double digits in the first half.
TAVR was up 30% in the first half. MitralClip and Triclip, and our structural intervention portfolio, I mean, of that is growing really strong. So you know, that international team has done a really good job and there are things that The US organization can learn from some of the strategies that have been developed there.
So work to be done there. You know, but I still think that this is probably 1 of our key growth drivers. If you think about, you know, the pipeline that we are assembling, you have got a lot of you have got guideline changes.
You have got product launches. We just launched Tri Clip In Japan. Label expansions, pipeline, I think Cephia going into trial, I continue to just only hear in incredibly positive things about this mitral valve replacement I think we have the potential to live up to the promise that we thought maybe a decade ago in 2015 when everybody was making investments in Mitra, believing that could be just as big as TAVR.
I actually think now with this product, we have the potential to actually make that a reality. So we got a lot of momentum here. And I think in the short term, we are dealing with, some improved commercial execution that we have gotta do.
And I have got, I have got trust and confidence in the team that they know what they have got to do, and they will deliver.
So Thank you.
And our next question will come from Joanne Wuensch from Citi. Your line is open.
Good morning, and thank you so much for taking the question. The broad-out guidance commentary on nutrition, for 2% to 4% is a nice acceleration off of the last couple of quarters. Sounds like you are getting some good momentum out of the Wick contracts Is there an update that you can give us sort of a state of the union of what you are seeing in terms of launching some new products as well as market positioning?
Thank you so much.
Robert Ford
President & CEO
Yeah. Absolutely. Think I mentioned in our on our first in our Q1 call that we were tracking according to plan.
That was back in April. I am reiterating that same here. We remain very much on track.
There are a lot of proof points here, Joanne, in terms of being able to feel confident about not only the acceleration in the second half, but establishing this kinda 2 to 4% kinda range here for this business. A $125 million of sequential growth, as I said in my preferred comments. And, what I liked about it as we are looking at it every single month, it was it was it was getting better.
So couple highlights, I guess, on the pediatric side, you know, as I said, the international portion is now back to back to positive growth. Actually had the highest Our sales in international pediatrics has been the highest in the last 2 years. So I think the teams are doing a good job there.
International pediatric, you know, we referenced the contract the WIC contracts. Those are now fully baked in, and we are back to market leadership after at 6 months of very hard work out in the field. So the team has done a good job there.
On the adult side, which is probably where the pricing strategy had more of an impact or at least we expected it to have more of an impact. I think the volumes are response responding very positively to that. The retail consumption of Ensure in the U.S. Is up double digits versus our exit in 2025.
Of course, that is a pretty low point here, but if you if you look at it from a year over year perspective, like I said, it is it is it is 1 of the highest growth rates we have had in over a year and a half from a consumption perspective. So you have got the volume consumption now chewing through that price that we took in Q4. And I expect both these businesses now adult and pediatric to go back to a positive territory as we have worked our way through all the inventory and the new pricing.
So I think Q3 will probably be the most, I would say, cleanest quarter. Obviously, Q4 will have a pretty big comp issue. Right?
Which is why I am if you look at the exit rate, we are gonna be in that 2.5%, 3% if you take it on a 2 year CAGR. So that is why I am I am I am anchoring this kinda 2% to 4% trajectory. The new product launches are doing very well. there is obviously a lot of focus on protein, especially with GLP-1 users.
And we have been trying to offer something that is a little different not just the protein, but also protein with less sugar. Because a lot of the products that are out there have you know, they taste very well, but they taste very well because there is a lot of sugar. And, yeah, some of the companies that are marketing these products, they are, you know, they are notorious for knowing how to how to work with sugar.
So I would say, we have got good momentum from the marketing messaging around high protein and low sugar. And then we have got a bunch of upcoming product launches. I think probably the ones I am more excited about is we have got a collagen protein shake that is coming out.
We will be offering a new adult product that will have not only protein and HMB, but we are gonna be adding creatine-- sorry, creatine to it. So that is gonna be a very strong focus. And then we will also be launching a, a new infant formula.
In the second half using whole milk. So I think that the state of the union here, Joanne, is state of the union here, Joanne, is listen. I think the teams have responded well to the challenge.
They are obviously things that we can continue to do better. We know what they are. We are gonna continue to focus on them.
But I think right now, the trajectory and the plan that we had a little bit ahead of that. I am not gonna change that guidance right now. Based on 2 quarters, but, you know, you could see if we can continue to maintain this momentum and continue to surpass what our expectations were.
There might be an offer opportunity here to kind of rethink about the guidance of this business. But right now, I think we are in the right spot, and this is just about execution. Developing proof points that, you know, that we are moving that we are moving forward and that the strategies that we put in place are reigniting the growth in this So Wonderful.
Thank you.
Crystal, we will take 1 more question, please. Thank you. And our last question will come from Robby Thibault from BTIG.
Your line is open. Robert, Thibault: Hi. Good morning.
Thanks so much for taking my question. I wanted to circle back here on amulet in the left atrial appendage closure market. You certainly got a really exciting product catalyst ahead with Amulet 360.
But I just want to understand what Abbott is seeing out there in the market today. Certainly, your competitors talked about some challenges there facing. So I just wanna understand, sort of the appetite for left atrial appendage closure today.
Thanks for taking the question.
Robert Ford
President & CEO
Sure, Robby. I mean, this is ultimately a very attractive market, which is why we continue to make the investment. it is $2 billion market. The competitor has a 90% market share.
So to be honest with you, you know, given the market share differences there, I will defer to our competitor to for more specific for more market growth projections here, Robby. My focus and the team's focus here is on is on market share capture. I think this represents a big opportunity for us.
Data and feedback from Amulet 360 has been has been fantastic actually. You now have what was known as a superior product to be able to actually seal the LAA. Now with 360, you have a much more seamless implant experience for the physician.
So I think that this is, this is going to bode well for our AP business. As you know, the LEA is increasingly becoming an EP procedure. And if you think about where a lot of the growth is coming from, it is coming from the concomitant segment.
And I think we are well positioned there to be able to kind of drive market share. I think this it is not by accident that we moved this portfolio from Structural Heart into our AP business because we believe that the winning company in this space not only has great PFA catheters, great mapping systems, great field mappers, but you also got to have a great LAA device here to be able to do that. And I think we are way ahead from our competitors from that perspective.
So listen, I think this is an attractive market. You know, about its future growth projections. I mean, you know, we could probably lay out, you know, the opportunities that exist there, but my more immediate is to be able to kind of gain market share.
We are gonna have an opportunity to essentially relaunch a product. You do not get a lot of opportunities like that. We will leverage some of the lessons we have learned, and I am pretty confident here that we will be able to, have this be a nice growth driver for us in 2027 and beyond.
I actually think that this idea of concomitant procedures with LAA are not just restricted to the electrophysiology segment. I think there is gonna be opportunities in the interventional cardiology side to also think about. So the way we think about it is, yeah, there is an opportunity over here where we are going to focus on market share, but there is I think there is also market development work to happen both in the EP side, but also in the conventional side too.
So a lot of work going on there, but I would say very excited about bringing this next generation product to market. So and feel good about the market and the product we have and the team that we got. So with that, I will just close on the comments here since we are up on time.
I would say good progress on addressing what are these, I would say, short-term and kind of temporary challenges that, that we have highlighted, in January. So very good progress there. Think we are entering the second half with a lot of momentum, several of our key growth drivers.
We know what they are. We know what we need to do. And, and that is what we are focusing on, every single week and month, on to the targets that we have set for ourselves.
So my confidence remains high in that second half acceleration. The efforts and focus that we put on gross margin and our gross margin expansion strategy, both from a mix and cost mitigation, they are having an impact. And that is allowed us to raise our full year EPS guidance.
And we have raised it more by the beat that we had in the second quarter because we believe that the sustainability of this expansion is there. Our cash generation and cash flow management are likely gonna put us ahead of our January forecast for the year, and that is gonna just allow greater flexibility here for capital return. And I am extremely excited about the pipeline that we built both for the products that we are launching, the future product launches.
That we are gonna have over the next 24 months. I think it gives us confidence that we have got a lot of momentum that we are building is sustainable as we move into 2027 and 2028. So with that, I thank you for joining us today.
Thank you all for your questions.
This now concludes Abbott's conference call. A webcast replay of this call will be available after 11AM Central Time today on our website abbott.com. You for joining us today.
Thank you. This concludes today's conference call. Thank you for your participation.
You may now disconnect. Everyone, have a wonderful day.
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