# How Abbott Laboratories makes money

CXProWealth Business Lens · Abbott Laboratories (ABT) · Q2 FY2026

Read from the 10-Q for the period 2026-04-01 to 2026-06-30, filed 2026-07-28 with the SEC (accession 0001628280-26-050134): https://www.sec.gov/Archives/edgar/data/1800/000162828026050134/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $12.6B (+13.0% on the year)
- Operating income: $1.7B (operating margin 13.4%)
- Net income: $928.0M (net margin 7.4%)
- Gross margin: 57.7%
- Free cash flow: —
- Cash conversion (operating cash flow / net income): —
- Capital expenditure: — of revenue

## Where the money goes (Q2 FY2026)

- Established Pharmaceutical Products → Net sales: $1.5B
- Nutritional Products → Net sales: $2.1B
- Diagnostic Products → Net sales: $3.1B
- Medical Devices → Net sales: $5.9B
- Net sales → Total operating cost and expenses: $10.9B
- Total operating cost and expenses → Cost of products sold, excluding amortization of intangible assets: $5.3B
- Total operating cost and expenses → Amortization of intangible assets: $658.0M
- Total operating cost and expenses → Research and development: $892.0M
- Total operating cost and expenses → Selling, general, and administrative: $4.0B
- Net sales → Operating earnings: $1.7B
- Operating earnings → Interest expense: $351.0M
- Operating earnings → Net foreign exchange (gain) loss: $4.0M
- Operating earnings → Earnings before taxes: $1.3B
- Other (income) expense, net → Earnings before taxes: $134.0M
- Interest (income) → Earnings before taxes: $52.0M
- Earnings before taxes → Taxes on earnings: $596.0M
- Earnings before taxes → Net Earnings: $928.0M

## Where the revenue comes from

### Segments (Revenue - Schedule of Revenue by Sales Category (Details))

| Member | Value | Share |
|---|---:|---:|
| Medical Devices | $5.9B | 46.5% |
| Diagnostic Products | $3.1B | 24.6% |
| Nutritional Products | $2.1B | 17.0% |
| Established Pharmaceutical Products | $1.5B | 11.9% |

The members sum to total revenue.

### ConsolidationItems (Revenue - Schedule of Revenue by Sales Category (Details))

| Member | Value | Share |
|---|---:|---:|
| Operating Segments | $12.6B | 100.0% |
| Other | $5.0M | 0.0% |

The members sum to total revenue.

## Key insights

### One segment earns more than the whole company

Medical Devices earns more than Abbott does in total, because costs held outside the segments outweigh what the others earn.

Medical Devices brought in $5.85B of the quarter's $12.6B net sales, 46.5%, and $1.97B of segment operating earnings, a 33.6% segment margin. Abbott's operating earnings were $1.69B, so this one segment's earnings equal 116.3% of the company total. _(from the filing)_
The other segments earn at lower rates: Established Pharmaceutical Products 25.5% on $1.50B of sales, Nutritional Products 17.2% on $2.14B, and Diagnostic Products 16.1% on $3.09B, a segment that now includes Exact Sciences. _(from the filing)_
The gap between segment earnings and the company total is cost the segments do not carry, such as amortization of acquired intangible assets and corporate and legal costs. Reading the segments alone overstates what the business keeps; reading the total alone hides how concentrated the earning power is. _(analysis)_
Much of what the segment sells is used up and replaced, such as glucose sensors and single-use catheters, and the filing names continuous glucose monitors and ablation catheters among its growth drivers. That repeat demand is a plausible reason the segment earns well above the margin of nutrition. _(analysis)_

### Products got cheaper to make; overhead took the margin

Product cost fell as a share of sales, but selling and administrative cost rose faster, pulling operating margin down to 13.4%.

Cost of products sold, before amortization, fell to 42.3% of net sales from 43.6% a year earlier. Selling, general and administrative cost rose 30.2% to $4.03B, 32.0% of net sales against 27.7%. Operating margin fell to 13.4% from 18.4%. _(from the filing)_
The filing attributes the rise in selling, general and administrative cost to the addition of Exact Sciences and related integration expenses, higher legal reserves, increased selling and marketing spend to drive growth, and the unfavorable impact of foreign exchange. _(from the filing)_
Two other lines added to the squeeze. Amortization of intangible assets rose 56.7% to $658M, 5.2% of net sales against 3.8%, and research and development rose 23.0% to $892M, 7.1% of net sales against 6.5%. The filing ties both largely to Exact Sciences. _(from the filing)_
Integration expense and legal reserves would fade if they are one-time; the selling and marketing push is meant to stay. Whether the share of sales spent on this line falls back as integration ends is the clearest test of how much of the margin loss is temporary. _(analysis)_

### Below the operating line, the fall deepened

Operating earnings fell 17.5%, but heavier interest and tax cut net earnings nearly in half, to $928M.

Interest expense rose to $351M from $121M, which the filing ties to debt incurred for the Exact Sciences acquisition. It absorbed 20.7% of operating earnings, against 5.9% a year earlier. _(from the filing)_
Taxes on earnings rose to $596M from $371M, 39.1% of earnings before taxes against 17.3%. The filing says the year-to-date tax charge includes expense related to a deferred tax asset recognized as a significant non-cash benefit in a prior year, and net expense from resolving prior-year tax positions. _(from the filing)_
Earnings before taxes fell 29.1% to $1.52B and net earnings 47.8% to $928M, while net sales rose 13.0% to $12.6B. Diluted earnings per share fell to $0.53 from $1.01. _(from the filing)_
Part of the tax charge relates to earlier years, so this quarter's rate does not describe a normal quarter. The interest is different: it follows the acquisition debt and remains while that debt is outstanding, which makes it the lasting part of the gap between operating and net earnings. _(analysis)_

## For members

Signed-in members read, on the page: the investor's and the founder's views of Abbott Laboratories (its fundamentals against its peers, where the profit is made, how the model works, where every $100 of revenue goes against the industry, the path to scale), its performance over time with every line as filed, and the edge and the risks. Membership is free.

## Member research

Signed-in members read, on the page: what Abbott Laboratories's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Abbott Laboratories 10-Q for the period to 2026-06-30: https://www.sec.gov/Archives/edgar/data/1800/000162828026050134/ (2026-07-28)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-03 · as of 2026-11-03