AI-assisted research analysis by FutureKnowledge. Sources checked 21 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
Abbott Laboratories said on Wednesday it will spin off its nutrition business, the maker of Similac and Ensure with about $8.5 billion in annual sales, into a separate listed company by the end of 2027, while cutting its 2026 sales growth forecast to about 6%.
What Abbott announced
According to Abbott’s announcement, the new company will have roughly 16,000 employees and 14 manufacturing sites, and will own brands including Similac, PediaSure, Pedialyte, Glucerna and Ensure. Abbott will distribute the new company’s shares to its own shareholders, who will then hold stock in both. The company intends the distribution to be tax-free for US federal income tax purposes. It still needs regulatory approvals, an effective Form 10 registration statement and final board approval.
Daniel Salvadori, who currently runs Abbott’s established pharmaceuticals and nutrition businesses, will be chief executive of the new company. The remaining Abbott will have about $42 billion in sales and about 106,000 employees, centred on medical devices, diagnostics and branded generic medicines. Abbott expects the two companies’ combined dividend to equal its own dividend at the time of separation, and says the plan does not change its 2026 guidance.
Chief executive Robert Ford said the split “will benefit both companies,” Reuters reported.
Abbott Q3 results and the guidance cut
The spin-off came with third-quarter results. In its results release, Abbott reported sales of $13.01 billion, up 14.5% as reported and 7.0% on a comparable basis. Adjusted earnings per share rose 9.2% to $1.42, while GAAP EPS fell to $0.53 from $0.94. The reported jump is inflated by the purchase of Exact Sciences, completed on 23 March 2026; the comparable figure counts Exact’s sales in both years.
- Diagnostics: $3.31 billion, up 46.7% as reported but 6.4% comparable; cancer diagnostics grew 13.8% comparable.
- Medical devices: $5.83 billion, up 6.9%; electrophysiology rose 15.0% and diabetes care 6.2%.
- Established pharmaceuticals: $1.61 billion, up 6.8% as reported and 8.4% comparable.
- Nutrition: $2.26 billion, up 5.1%; paediatric nutrition grew 8.8% and adult nutrition 2.0%.
Abbott now expects full-year comparable sales growth of about 6.0%, down from an earlier range of 6.5% to 7.5%, MassDevice reported. It narrowed adjusted EPS guidance to $5.50–$5.55, keeping the midpoint, and guided fourth-quarter adjusted EPS of $1.62–$1.67. Reports differ slightly on whether the $1.42 was in line with estimates: Reuters, citing LSEG data, said in line; MassDevice, citing Zacks, called it a one-cent miss.
On the earnings call, as transcribed by Investing.com, management linked the cut to slower electrophysiology orders tied to the left atrial appendage market and softer diabetes care growth, citing limited reimbursement for type 2 patients and pricing pressure outside the US.
Why Abbott is separating nutrition
The numbers show why nutrition is the odd one out. It was the only Abbott business with lower sales over the first nine months of 2026, down 1.3% as reported, Stock Titan’s analysis of company figures shows, even though it returned to growth in the third quarter. Segment sales grew just 0.4% in 2025 and 3.2% in 2024, with volumes falling in both years. Devices and diagnostics, by contrast, grew at high single digits on a comparable basis in the quarter.
Ford told analysts the market has shifted towards consumer wellness and retail, and that a standalone company could move faster on marketing, investment and small acquisitions, according to the Investing.com transcript. He said a sale was not chosen partly because of tax and timing. Abbott said in its announcement that the two businesses have different growth profiles and innovation cycles.
There is also a legal backdrop. Abbott has settled infant-formula claims for more than $1 billion, including $670 million covering about 2,000 claims and close to $385 million to resolve US Justice Department allegations, MassDevice reported. On the call, management confirmed in response to an analyst question that liability for the formula-related litigation stays with Abbott, per the transcript.
Other large companies are also reshaping this month, from Salesforce’s $5.66 billion Braze acquisition to Adidas raising its 2026 profit outlook.
Abbott shares and market reaction
Abbott shares fell as much as 4% to $98.12 before the opening bell and were about 2% lower later in the session, MoneyCheck reported; they were down nearly 16% this year.
What it means for India and other markets
Abbott’s results release said key emerging markets in its established pharmaceuticals arm grew 9.0% as reported, with double-digit growth in India, though it gave no India figure. About 57% of nutrition sales were outside the US in 2025, according to Stock Titan’s analysis, but Abbott has not said how the separation will divide country operations or local entities. In India, packaged food makers already face closer scrutiny of sugar in infant food, as covered in our report on FSSAI notices and the draft curb on sugar in infant food. A focused nutrition company would face that regulation without the cushion of a larger devices business.
Who is more or less exposed
- Abbott shareholders would end up holding two stocks with different growth and dividend profiles; the distribution ratio and dividend split have not been announced.
- Nutrition competitors and retailers may face a more aggressive, marketing-led rival if the new company uses its freedom as described.
- Suppliers and employees of the 14 nutrition plants face a transition period, with one-time separation costs Abbott says it will quantify later.
Scenarios to watch
These are conditional scenarios, not predictions.
| If… | Then… | Signal to watch |
|---|---|---|
| Nutrition keeps growing at Q3’s 5% pace | The standalone company could start life with steadier sales than in 2024–25 | Q4 and early-2027 nutrition sales |
| Diabetes care reimbursement widens for type 2 patients | Abbott’s device growth could recover towards earlier expectations | US reimbursement decisions on glucose monitors |
| Separation costs come in high | Near-term GAAP earnings could be weighed down until 2027 | Cost estimates in the Form 10 filing |
| Electrophysiology orders stay slow | Fourth-quarter sales growth could fall short of management’s target | Q4 electrophysiology growth |
What to watch next
- The Form 10 filing, which should give the nutrition company’s standalone financials, debt and name.
- Abbott’s 2027 guidance, which it plans to give in January.
- Details on how the dividend and any infant-formula liabilities are split between the two companies.
Bottom line
Abbott is separating its slowest-growing business, an $8.5 billion nutrition unit with some of the best-known brands in infant and adult nutrition, to focus on devices and diagnostics. The plan arrived alongside a modest cut to 2026 sales growth, and the market reacted more to the cut than to the split. The details that will decide how the two companies are valued, including debt, dividends and liabilities, are still to come.
Method note: This analysis compared reports from Reuters (via KSL), MassDevice, Stock Titan, MoneyCheck and an Investing.com earnings-call transcript with Abbott’s spin-off announcement and its third-quarter results release. Reports differed on whether adjusted EPS met estimates and on the size of the share fall; we have attributed each figure to its source and used Abbott’s releases for all company figures.