Abbott Laboratories is preparing to separate its nutrition division, which generates $8.5B in annual revenue, into a standalone publicly traded company by late 2027.
The new company will hold Similac, PediaSure, Pedialyte, Glucerna, and Ensure, with about 16K employees and 14 manufacturing sites. Abbott keeps devices, diagnostics, and established medicines, leaving it with roughly $42B in sales and about 106K employees.
Shareholders would receive stock in the new company through a tax-free distribution, with the combined dividend expected to match Abbott's payout at the time of separation. Completion depends on regulatory approvals, an effective Form 10, and final board approval.
Abbott named Daniel Salvadori as chief executive of the new company. Management says the two businesses have different investment profiles, growth rates, and innovation cycles.
"This separation will benefit both companies."
Robert Ford, Abbott
Why Abbott is letting go of formula
Nutrition has been Abbott's problem child since the 2022 recall and the shutdown of its Sturgis, Michigan plant.
The unit lost a major US government supply contract last year, then raised prices to cover higher manufacturing costs, which hurt demand.
It also faces lawsuits over preterm infant formula, a legal overhang that follows the business into its new life as a standalone stock. Abbott isn't alone in slimming down. Johnson and Johnson has its own separation planned for 2027.
Device miss drags the sales outlook
Third-quarter sales reached $13.01B, up 14.5% as reported and 7.0% on a comparable basis, with adjusted earnings per share of $1.42 against $1.30 a year earlier.
Medical devices brought in $5.83B, short of the $5.88B analysts expected, on weaker heart device sales. Structural heart grew just 1.9% to $592M, while electrophysiology rose 15% to $873M.
Diagnostics jumped 46.7% as reported to $3.31B, lifted by the Exact Sciences deal that closed in March 2026.
Abbott Q3 2026 Sales by Segment
| Segment | Q3 2026 Sales ($B) | Comparable Growth YoY (%) |
|---|---|---|
| Medical Devices | $5.83B | +7.8% |
| Diagnostics | $3.31B | +6.4% |
| Nutrition | $2.26B | +4.9% |
| Established Pharmaceuticals | $1.61B | +8.4% |
| Total | $13.01B | +7.0% |
Abbott lowered its 2026 organic sales growth outlook to roughly 6%, down from its earlier projection of 6.5% to 7.5%.
The separation carries no change to 2026 guidance, so the trimmed outlook is purely about devices.
In a year's time the question gets cleaner, whether a slower-growing formula business is worth owning on its own, or worth trading away for a more focused medical technology company.
