Abbott Laboratories has projected a significant financial hit in 2025, largely driven by a steep drop in COVID-19 diagnostic test demand, newly imposed U.S. tariffs, and disruptions caused by a freeze in government funding for foreign health programs.
In a statement released Thursday, the global healthcare company said it anticipates more than $1 billion in headwinds for the year, with its diagnostics division expected to bear the brunt. The segment is projected to suffer a $700 million revenue loss, primarily due to declining COVID test sales and intensifying pricing pressure from China’s bulk purchasing policies for medical devices.
Shares of Abbott (ABT.N) fell nearly 9% following the announcement, as the company also forecast third-quarter earnings below Wall Street expectations. It now estimates earnings per share (EPS) for the third quarter to range between $1.28 and $1.32, compared to analysts’ average estimate of $1.34, according to LSEG data.
CEO Robert Ford acknowledged that the situation reflects a confluence of global economic and policy factors. “Together with the U.S. funding freeze for HIV testing, that’s over a billion dollars of headwind,” Ford said during a call with analysts.
The U.S. government’s foreign aid freeze has particularly disrupted the supply chains for vital diagnostic tools used to combat infectious diseases like HIV and malaria in some of the most underserved regions worldwide. The withdrawal of support is expected to severely impact testing and treatment infrastructure in low-income nations.
In addition to pandemic-related declines, tariff-related costs are expected to amount to nearly $200 million, with the majority of the financial burden expected to occur in the second half of 2025. However, Ford emphasized that the tariff outlook has improved somewhat since January, and the burden is now anticipated to be “less of a headwind” than initially projected. Johnson & Johnson, a larger competitor, echoed a similar sentiment earlier this week, reducing its estimated tariff impact for the year to about $200 million.
Despite these challenges, Abbott posted better-than-expected second-quarter results, with an adjusted EPS of $1.26, slightly surpassing analyst expectations, fueled by strong sales of its continuous glucose monitoring (CGM) devices—a cornerstone of its growing diabetes care portfolio.
Looking ahead, the company plans to bolster its manufacturing footprint in the U.S., with a new cardiovascular production facility in Georgia scheduled for completion by 2028. This investment complements earlier expansion projects announced in Illinois and Texas, expected to begin operations by the end of this year.
Abbott now expects full-year sales growth to be in the range of 7.5% to 8.0%, slightly down from its previous forecast of 7.5% to 8.5%, as it navigates a landscape shaped by post-pandemic realities, international pricing pressures, and shifting U.S. trade and aid policies.
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