Abbott (ABT.N), opens new tab warned on Thursday it expects more than $1 billion in financial headwinds this year from a sharp decline in COVID-19 testing demand, new U.S. tariffs, and the government’s foreign aid freeze.
Its shares were down nearly 9% as the medical device giant also forecast third-quarter profit below estimates.
Abbott’s diagnostics division will be hit hardest, with a projected $700 million revenue impact in 2025 due to fading COVID test sales and pricing pressure from China’s procurement program that buys medical devices in bulk at steep discounts.
Adding to the strain, tariff-related costs are expected to total just under $200 million, with most of the impact landing in the second half of the year.
But CEO Robert Ford said tariffs are now expected to be “less of a headwind than what we had originally anticipated back in January.” Larger rival Johnson & Johnson (JNJ.N), opens new tab on Wednesday halved its expectations for tariff costs this year to about $200 million.
“Together with the U.S. funding (freeze) for HIV testing, that’s over a billion dollars of headwind,” Abbott’s Ford told analysts on a call.
The Trump administration’s decision to halt foreign aid has upended the supply chain for medical products and diagnostic tests crucial for fighting diseases including HIV and malaria in some of the world’s poorest countries.
Abbott projected a profit of between $1.28 and $1.32 per share for the current quarter, below expectation of $1.34, according to data compiled by LSEG. It estimated annual sales growth of between 7.5% and 8.0%, compared with 7.5% to 8.5% expected earlier.
On an adjusted basis, the company reported a profit of $1.26 per share for the second quarter, ahead of estimates of $1.25, on strong sales of its continuous glucose monitoring (CGM) devices.
Abbott also plans to build a manufacturing facility in Georgia by 2028 to support its cardiovascular business, adding to its April announcements for projects in Illinois and Texas that are expected to go live by the end of the year.
