Abbott Laboratories to spin off nutrition unit amid baby formula lawsuits

Abbott Laboratories announced plans on October 21, 2026 to spin off its $8.5 billion nutrition unit into a separate public company by late 2027, following costly litigation and plant contamination settlements. Led by Daniel Salvadori, the new entity absorbs brands like Similac and Ensure. Simultaneously, Abbott lowered its 2026 sales growth forecast to 6% as medical device revenue missed estimates, aligning with a broader trend of healthcare restructuring.

NEC baby formula lawsuits

• ▪Abbott Laboratories agreed in August 2026 to pay $670 million to settle lawsuits alleging its specialized baby formula for premature infants caused necrotising enterocolitis
• ▪Abbott Laboratories and Reckitt Benckiser faced 1,700 lawsuits involving claims on behalf of 12,700 infants alleging baby formula contributed to necrotising enterocolitis

Nutrition product pricing changes

• ▪Abbott Laboratories lowered prices on several nutrition products at the end of 2025 to attract price-conscious consumers following previous price increases
• ▪Abbott Laboratories lost a major US government supply contract in 2025 and faced higher manufacturing costs, forcing price increases that hurt nutrition product demand

Q3 2026 financial results and guidance

• ▪Abbott Laboratories reported third-quarter 2026 medical device sales of $5.83 billion, missing analyst estimates of $5.88 billion due to weaker heart device sales
• ▪Abbott Laboratories reported Q3 2026 total revenue of $13.01 billion and adjusted profit per share of $1.42
• ▪Abbott Laboratories cut its full-year 2026 sales growth forecast on October 21, 2026 to about 6%, down from its prior projection of 6.5% to 7.5%
• ▪Abbott Laboratories narrowed its 2026 full-year adjusted profit per share forecast on October 21, 2026 to between $5.50 and $5.55

Johnson & Johnson corporate restructurings

• ▪Johnson & Johnson is planning a business separation for 2027 to offload underperforming businesses and sharpen focus on higher-growth segments
• ▪Johnson & Johnson spun off its consumer health division into Kenvue Inc. in 2023 as part of a broader healthcare corporate restructuring trend