Abbott Experiences Largest Drop in Almost 24 Years Due to Formula Pricing Misstep

Abbott Laboratories Faces Profit Shortfall Amid Discounting Efforts

Photographer: Jamie Kelter Davis/Bloomberg

Abbott Laboratories has announced that its first-quarter earnings will fall short of analysts’ projections, after the company resorted to offering discounts on its nutrition products to attract budget-conscious consumers. This news triggered a sharp decline in the company’s stock price.

The company anticipates adjusted earnings per share for the first quarter to be between $1.12 and $1.18, slightly below the Wall Street consensus of $1.19. Analysts had already tempered their expectations, predicting that Abbott would issue cautious guidance due to the ongoing decline in Covid-19 test sales since the pandemic’s peak.

Top Stories from Bloomberg

During the fourth quarter, Abbott reported revenue of $11.5 billion, falling short of the $11.8 billion analysts had expected. Nutrition sales came in at $1.9 billion, well below the anticipated $2.19 billion. The company initially increased prices on infant formula to offset higher production costs, but later introduced discounts and promotions after facing resistance from consumers.

“Overall, this was not a straightforward update,” commented William Blair analysts Andrew Brackmann and Brandon Vazquez in a research note.

Abbott’s shares ended Thursday down 10% in New York, marking their steepest single-day drop since June 2002.

CEO Robert Ford stated, “We are shifting our nutrition business to focus more on sustainable volume growth, which will impact the first half of the year but should strengthen our long-term prospects.” He also revealed plans to introduce eight new nutrition products in 2026.

The company’s adult nutrition segment, which includes protein drinks for individuals using weight-loss medications, has shown recent growth. However, Abbott continues to face legal challenges over allegations that its infant formula may cause necrotizing enterocolitis (NEC), a severe intestinal condition affecting premature infants.

Abbott’s medical device division, its largest segment, generated $5.67 billion in fourth-quarter sales, matching expectations. This unit includes products such as continuous glucose monitors for diabetes management.

The diagnostics business has struggled as demand for Covid-19 tests has waned. In November, Abbott announced an agreement to acquire Exact Sciences Corp., a cancer screening company, in a deal valued at approximately $21 billion. This acquisition is expected to enhance Abbott’s diagnostics portfolio by adding tests like Cologuard, which screens for colorectal cancer—the second most deadly cancer in the United States.

Outlook and Future Plans

Looking ahead, Abbott projects adjusted earnings for the full year to be between $5.55 and $5.80 per share, compared to the analyst average of $5.68.

“Our portfolio is experiencing robust momentum,” Ford noted, highlighting the success of products such as the Aveir leadless pacemaker and diabetes care devices. “With a strong pipeline and the upcoming Exact Sciences acquisition, we are optimistic about our future direction.”

Most Popular from Bloomberg Businessweek

©2026 Bloomberg L.P.