NEW YORK — As President Donald Trump's tariffs go into effect, Abbott executives said on Wednesday that the company is prepared to mitigate the expected impacts in the second half of 2025.
On a conference call to discuss the company's first quarter financial results, Abbott CEO Robert Ford said that the firm is "built not just to operate but to succeed in rapidly evolving environments like this" and is "prepared to adeptly manage" the effects of the tariffs. While the tariffs will have a financial impact, Ford said that Abbott has 90 manufacturing sites around the world and is "well positioned to implement mitigations to help manage the impact of the tariffs" and maintain its revenue growth.
The two regions Abbott expects to be most impacted by the tariffs are the US and China, and the anticipated impact will be a "few hundred million dollars" in the second half of 2025 with no impact expected in Q2 2025, he added. Abbott is also sharing data and information with industry groups like AdvaMed to advocate for tariff exemptions for medical devices and technology.
Abbott has investigated both short-term and long-term strategies to help soften the blow of the tariffs, and although it will be taking some short-term steps such as building up inventory, Ford said that the company needed to consider how to "mitigate this more in a long-term sustainable way."
"One thing we have learned from tariffs is they don't go away," he said. If the "entire strategy is building inventory, well guess what's going to happen in 2026 or whenever that inventory runs out?"
The company's manufacturing framework has "been in place for decades," and while it wasn't put in place because of the tariffs, it will "serve us well … when we think about more long-term planning for tariffs." That strategy has involved aligning manufacturing "as close as possible to the customer" and having "an appropriate amount of redundancy," he said. A large percentage of Abbott's sales in the US are sourced from products manufactured in the US, and Abbott has tried to lessen the risk of any issues by spreading its manufacturing network out, Ford added. The firm is on track to open two new diagnostics manufacturing and research and development facilities in Illinois and Texas by the end of this year, he noted.
"If we had put all of our manufacturing in Southeast Asia or put all of our manufacturing in Europe, then that might be a little bit more complicated," he said. "Tariffs [weren't] on the list of risks, but [this framework] provides a lot of maneuverability."
Tariffs were just one part of a broader conversation after Abbott announced that its Q1 2025 Diagnostics revenues declined 7 percent year over year, while its total revenues grew 4 percent.
For the three months ended March 31, Abbott reported overall Q1 revenues of $10.36 billion, up 4 percent on a reported basis from $9.96 billion in Q1 2024 and just missing analysts' average estimate of $10.42 billion.
On an organic basis excluding COVID-19 testing, revenues rose 8 percent year over year, the Abbott Park, Illinois-based firm said in a statement.
The firm reported its Diagnostics segment revenues fell 7 percent to $2.05 billion from $2.21 billion a year ago. Within Diagnostics, core laboratory revenues were down 2 percent year over year to $1.18 billion from $1.21 billion. Meanwhile, its molecular diagnostics revenues fell 6 percent to $122 million from $129 million in Q1 2024. Point-of-care revenues were up 2 percent to $142 million from $139 million, and rapid diagnostic revenues fell 17 percent to $613 million from $741 million.
COVID-19 testing sales were $84 million for the quarter, down from $204 million in Q1 2024.
Diagnostic sales were impacted by the continued decline in COVID-19 testing-related sales and the volume-based procurement programs in China, Abbott said, adding VBP particularly impacted global core laboratory diagnostics. Excluding China, core laboratory sales grew nearly 7 percent, Ford said.
Ford noted that Abbott is seeing growth in its diagnostics business in all regions except China because of the VBP program there and its impact on pricing. In other VBP programs Abbott has participated in, there have been price hits but those were lessened because there was a smaller group of competitors who gained VBP contracts, so there was volume growth. In this most recent round of VBP, all manufacturers were able to keep their products on the market but took the same price hits.
As a result, Abbott has been "faced with the price hit and no volume offset," he said. To lessen the effect of China's revenue decline, Ford said the company will have to see improvements in other markets, but it's a "delicate balance" to improve growth while not spending a lot of capital.
He noted that China is still an important market and still has good profitability.
Excluding COVID-19 testing-related sales, Abbott's Diagnostics segment posted year -over-year revenue growth of nearly 1 percent. Organically, core laboratory revenues increased 1 percent year over year, molecular diagnostics revenues fell 4 percent, point-of-care revenues increased 3 percent, and rapid diagnostics revenues fell 16 percent.
Ford noted that the company is expanding its transfusion screening business with the upcoming launch of a new system. Currently, the firm markets its Alinity S platform to identify antibodies and antigens that may be present in donated blood. It has now developed the new Alinity N platform for molecular nucleic acid testing for blood screening, detecting RNA and DNA of "several diseases that could potentially contaminate blood donations," Ford said. Nucleic acid testing for blood screening marks an "attractive new growth opportunity for our business," he added.
Among its other business segments, Abbott's Q1 Nutrition revenues rose 4 percent to $2.15 billion from $2.07 billion; Established Pharmaceuticals revenues increased 3 percent to $1.26 billion from $1.23 billion; and Medical Devices revenues rose 10 percent to $4.90 billion from $4.45 billion.
Abbott reported net earnings of $1.33 billion, or $.76 per share, in Q1 compared to $1.23 billion, or $.70 per share, in the year-ago period. Adjusted EPS was $1.09, beating the analysts' consensus estimate of $1.07.
Abbott maintained its prior full-year 2025 adjusted EPS guidance of between $5.05 and $5.25. Q2 2025 adjusted EPS is expected to be between $1.23 and $1.27.
The firm also maintained its full-year 2025 organic sales growth guidance range to between 7.5 percent and 8.5 percent.
In Wednesday afternoon trading on the New York Stock Exchange, shares of Abbott were up 4 percent to $130.84.