Abbott Laboratories Raises 2026 EPS Outlook on Strong Device Growth

What happened

Abbott posted second-quarter 2026 results with revenue rising 13% year-over-year to $12.59 billion, driven by 4.8% comparable sales growth excluding foreign exchange impacts. Adjusted diluted EPS came in at $1.31, ahead of the $1.28 analyst consensus, though reported net income fell to $928 million from a year earlier. The company raised its full-year 2026 adjusted EPS guidance range to $5.45–$5.60 from $5.38–$5.58, while reaffirming comparable sales growth guidance of 6.5–7.5%. Medical Devices sales grew 8.5%, led by Electrophysiology (low-teens growth) and Rhythm Management (9.5%), while Diabetes Care sales-anchored by continuous glucose monitoring-exceeded $2 billion and grew 9.5%. Cancer Diagnostics sales jumped 13%, and Abbott's Diagnostics US business expanded 7.5%. Nutrition sales rose sequentially by $125 million, with international Pediatric Nutrition up 6.5%. Adjusted gross margin improved 100 basis points to 58.0% of sales.

Why it matters

The earnings upgrade reflects Abbott's progress shifting its business mix toward higher-margin Medical Devices and Diagnostics, which now drive a larger share of total sales and profit. Stronger margins (58.0% adjusted gross margin) and accelerating sales in Electrophysiology, Heart Failure, and Cancer Diagnostics support a more resilient earnings trajectory even as Nutrition recovers slowly. The $2 billion quarterly milestone in continuous glucose monitoring underscores Abbott's market leadership in diabetes care, a franchise critical to sustaining long-term growth. For investors, the raised guidance signals management confidence that device and diagnostics momentum can offset lingering competitive pressure in glucose monitoring and operational headwinds in Nutrition. The company returned $2.1 billion to shareholders through dividends and buybacks during the quarter, reinforcing its capital allocation discipline.

Bigger picture

Abbott's Q2 performance sits within a broader healthcare sector pivot toward higher-margin, technology-enabled diagnostic and device platforms. The $21 billion acquisition of Exact Sciences, completed earlier, expanded Abbott's colorectal cancer screening portfolio and directly complements the 13% Cancer Diagnostics growth reported this quarter. Industry-wide, wearable biometric sensors and minimally invasive cardiac devices are seeing sustained demand driven by aging populations and chronic disease management needs. Abbott's regulatory progress-including CE Mark approval for Libre Duo (a dual glucose-ketone sensor) and enrollment completion in the TECTONIC US pivotal trial for its Coronary Intravascular Lithotripsy System-positions the company to capture share in expanding treatment categories. Meanwhile, updated American Cancer Society guidelines reaffirming Cologuard and Cologuard Plus as preferred colorectal screening options validate Abbott's diagnostic strategy. Investors should note that ongoing litigation in Nutrition remains a background risk, and pricing dynamics in continuous glucose monitoring could still constrain margin expansion if competitive intensity increases.

What to watch

Monitor third-quarter adjusted EPS, which Abbott guided to $1.38–$1.46, for confirmation that second-half momentum continues as management expects. Track sequential Nutrition sales trends to assess whether the $125 million Q2 improvement marks a sustained recovery or temporary stabilization. Watch for FDA approval timing of the Amulet 360 left atrial appendage device and TECTONIC trial data readout, as both could unlock incremental device revenue streams. Pay attention to continuous glucose monitoring competitive dynamics-particularly pricing pressure and share shifts-as this franchise represents over $8 billion in annualized sales and remains a key swing factor for full-year EPS delivery. Finally, observe adjusted gross margin progression; maintaining or expanding the 100 basis point year-over-year gain will be critical to validating the business mix shift thesis.