ABT

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How ABT rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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words, now 29,760

New in FY2025

Operating Earnings Gross profit margins were 52.6 percent of net sa les in 2025, 50.9 percent of net sales in 2024, and 50.3 percent of net sales in 2023.
The increase in 2025 reflects the favorable impact of margin improvement initiatives, partially offset by higher costs, including tariffs, and the unfavorable impact of foreign exchange.
The increase in 2024 reflects the favorable impact of margin improvement initiatives, partially offset by the unfavorable effect of foreign exchange.
Research and development (R&D) expenses were $2.9 billion in 2025, $2.8 billion in 2024, and $2.7 billion in 2023.
The increases in R&D expenses in 2025 and 2024 were primarily driven by higher spending on various projects.
In 2024, higher project spending was partially offset by lower 2024 charges for the impairment of IPR&D assets acquired in previous business combinations.
Selling, general and administrative (SG&A) expenses were $12.3 billion in 2025, $11.7 billion in 2024, and $10.9 billion in 2023 .
In 2025 and 2024, the increase in SG&A expenses was due to higher selling and marketing spending to drive growth across various businesses.
In 2024, SG&A spending was partially offset by the favorable impact of foreign exchange.
Restructurings In 2025, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostics, Nutritionals, Established Pharmaceuticals, and Medical Devices businesses.
Abbott recorded employee related severance and other charges of $274 million , of which $109 million was recorded in Cost of products sold, $53 million was recorded in R&D, and $112 million was recorded in SG&A expenses.
Payments related to these actions totaled $ 94 million in 2025 and the remaining liabilities totaled $ 180 million at December 31, 2025.
In addition, in 2025, Abbott recogniz ed fixed asset impairment charges of $28 million related to these restructuring plans.
In 2024, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostics, Medical Devices, Established Pharmaceuticals, and Nutritionals businesses, including the discontinuation of its ZonePerfect ® product line.
Abbott recorded employee related severance and other charges of $129 million , of which $62 million was recorded in Cost of products sold, $21 million was recorded in R&D, and $46 million was recorded in SG&A expenses.
In 2023, Abbott management approved plans to restructure various operations in order to reduce costs in its Medical Devices, Diagnostics, and Established Pharmaceuticals businesses.
Abbott recorded employee related severance and other charges of $144 million, of which $56 million was recorded in Cost of products sold, $22 million was recorded in R&D, and $66 million was recorded in SG&A expenses.
Interest Expense and Interest (Income) Interest expense, net decreased from $215 million in 2024 to $185 million in 2025.
In 2025, interest expense decreased primarily due to the repayment of approximately $2.0 billion of long-term debt in November 2024, March 2025, and September 2025, as well as the maturity of an interest rate swap associated with the March 2025 debt.
Interest expense decreased in 2024 due to the repayment of $2.25 billion of long-term debt in September and November of 2023, partially offset by a reduction in interest income due to lower average cash and short-term investment balances versus the prior year.
Other (Income) Expense, net Other (income) expense, net was $548 million of income in 2025 , $376 million of income in 2024, and $479 million of income in 2023 .
Other (income) expense, net includes income of $590 million, $542 million, and $498 million in 2025, 2024, and 2023, respectively, related to the non-service cost components of the net periodic benefit costs associated with the pension and post-retirement medical plans.
The increase in 2025 and the decrease in 2024 were primarily due to the recognition of a $143 million loss on the sale of a non-core business related to the Established Pharmaceutical Products segment in 2024.
The increase in 2025 also reflects higher income associated with the non-service cost components of net pension and post-retirement medical benefit costs.
Taxes on earnings included $ 92 million, $ 50 million, and $ 22 million in excess tax benefits associated with share-based compensation in 2025, 2024, and 2023, respectively.
As a result of the resolution of various tax positions related to prior years, taxes on earnings in 2025, 2024, and 2023 also included approximately $ 70 million of net tax benefit, $ 25 million, and $ 80 million of net tax expense, respectively.
In 2025, taxes on earnings included approximately $ 610 million of tax expense related to a deferred tax asset that was recognized as a significant non-cash tax benefit in a prior year.
In 2024, taxes on earnings included $ 7.5 billion in non-cash valuation allowance adjustments resulting from the restructuring of certain foreign affiliates and the confirmation of certain tax filing positions.
Accordingly, Abbott released the full valuation allowance on such deferred tax assets and recorded the offset to taxes on earnings.
Tax Cuts and Jobs Act (TCJA) included a one-time transition tax that is based on Abbott’s total post-1986 earnings and profits (E&P) that were previously deferred from U.S. income taxes.
The tax computation also required the determination of the amount of post-1986 E&P considered held in cash and other specified assets.
As of December 31, 2025, the remaining balance of Abbott’s transition tax obligation related to the TCJA was approximately $ 205 million.
The final installment will be paid in 2026 as allowed by the TCJA.
In September 2023, Abbott received a Statutory Notice of Deficiency (SNOD) from the IRS for the 2019 Federal tax year in the amount of $ 417 million.
Abbott and the IRS are in active discussions regarding several of the disputed items contained in the 2017 – 2020 SNODs.
In July 2024, Abbott received a $ 413 million tax assessment from the Malaysian tax authorities for the 2023 tax year.
The assessment applies a property capital gains tax on the value of the shares associated with the intercompany sale of an affiliate.
Abbott believes the assessment of the Malaysian tax authority to be without merit.
In October 2025, the Penang High Court upheld the assessment of the Malaysian tax authority.
In October 2025, Abbott filed an appeal with the Malaysian Court of Appeals.

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Gone since FY2024

Operating Earnings Gross profit margins were 50.9 percent of net sa les in 2024, 50.3 percent of net sales in 2023, and 51.5 percent of net sales in 2022.
The increase in 2024 reflects the favorable impacts of margin improvement initiatives, partially offset by the unfavorable effect of foreign exchange.
The decrease in 2023 reflects the unfavorable effects of lower sales of COVID-19 tests, foreign exchange, and higher costs for various manufacturing inputs, partially offset by the nonrecurrence of the negative impact in 2022 of the voluntary product recall in the nutritional business and the impact in 2023 of margin improvement initiatives.
Research and development (R&D) expenses were $2.8 billion in 2024, $2.7 billion in 2023, and $2.9 billion in 2022.
The increase in R&D expense in 2024 was primarily driven by higher spending on various projects, partially offset by lower 2024 charges for the impairment of in-process R&D (IPR&D) assets acquired in previous business combinations.
In 2023, the decrease in R&D expense was primarily driven by lower restructuring charges, lower impairment charges related to IPR&D acquired in previous business combinations, and other cost reductions.
Selling, general and administrative (SG&A) expenses were $11.7 billion in 2024, $10.9 billion in 2023 and $11.2 billion in 2022 .
In 2024, higher selling and marketing spending to drive growth across various businesses was partially offset by the favorable impact of foreign exchange.
The 2023 decrease in SG&A expenses reflects the favorable impact of foreign exchange and lower restructuring charges in 2023, as well as the non-recurrence of 2022 expenses related to the voluntary product recall in the Nutritional Products segment.
Restructurings In 2024, Abbott management approved plans to streamline certain operations in order to reduce costs and improve efficiencies in its Diagnostic, Medical Devices, Established Pharmaceutical and Nutritional businesses, including the discontinuation of its ZonePerfect ® product line.
Payments related to these actions totaled $ 32 million in 2024 and the remaining liability totaled $ 97 million at December 31, 2024.
In 2023, Abbott management approved plans to restructure various operations in order to reduce costs in its Medical Devices, Diagnostic, and Established Pharmaceutical businesses.
Abbott recorded employee related severance and other charges of $144 million of which approximately $56 million was recorded in Cost of products sold, $22 million was recorded in Research and development and $66 million was recorded in Selling, general and administrative expenses.
In 2022, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in its Medical Devices, Nutritional, Diagnostic, and Established Pharmaceutical businesses.
Abbott recorded employee related severance and other charges of $ 234 million of which $ 59 million was recorded in Cost of products sold, $ 36 million was recorded in Research and development and $ 139 million was recorded in Selling, general and administrative expenses.
In addition, Abbott recognized inventory related charges of $ 23 million and fixed asset impairment charges of $ 4 million related to these restructuring plans.
Interest Expense and Interest (Income) Interest expense, net decreased from $252 million in 2023 to $215 million in 2024.
Interest expense decreased in 2024 due to the repayment of approximately $2.25 billion of long-term debt in September and November of 2023, partially offset by a reduction in interest income due to lower average cash and short-term investment balances versus the prior year.
Interest expense, net decreased $123 million in 2023 due t o the favorable impact of higher interest rates on interest income, partially offset by the negative impact of interest rate hedge contracts related to certain fixed-rate debt.
Other (Income) Expense, net Other income, net was $376 million of income in 2024, $479 million of income in 2023 and $321 million of income in 2022.
Other income, net includes income of approximat ely $542 million, $498 million, and $406 million in 2024, 2023, and 2022, respectively, related to the non-service cost components of the net periodic benefit costs associated with the pension and post-retirement medical plans.
The decrease in 2024 reflects the recognition of a $143 million loss on the sale of a non-core business related to the Established Pharmaceutical Products segment.
In 2023, Other income, net included equity investment impairments that totaled approximately $39 million, as well as income from a $42 million reduction in the fair value of contingent consideration related to previous business acquisitions.
Taxes on earnings include approximately $ 50 million, $ 22 million and $ 43 million in excess tax benefits associated with share-based compensation in 2024, 2023 and 2022, respectively.
As a result of the resolution of various tax positions related to prior years, taxes on earnings in 2024, 2023 and 2022 also include approximately $ 25 million, $ 80 million and $ 20 million of net tax expense, respectively.
In the fourth quarter of 2024, taxes on earnings includes $ 7.5 billion in non-cash valuation allowance adjustments resulting from the restructuring of certain foreign affiliates and the confirmation of certain tax filing positions.
Accordingly, Abbott released the full valuation allowance on such deferred tax assets and recorded the offset to tax expense.
Tax Cuts and Jobs Act (TCJA) includes a one-time transition tax that is based on Abbott’s total post-1986 earnings and profits (E&P) that were previously deferred from U.S. income taxes.
The tax computation also requires the determination of the amount of post-1986 E&P considered held in cash and other specified assets.
As of December 31, 2024, the remaining balance of Abbott’s transition tax obligation related to the TCJA is approximately $ 432 million, which will be paid over the next two years as allowed by the TCJA.
In September 2023, Abbott received a Statutory Notice of Deficiency (SNOD) from the U.S.
Internal Revenue Service (IRS) for the 2019 Federal tax year in the amount of $ 417 million.
Abbott intends to vigorously defend its filing positions through ongoing discussions with the IRS, the IRS independent appeals process and/or through litigation as necessary.
Abbott reserves for uncertain tax positions related to unresolved matters with the IRS and other taxing authorities.
Abbott continues to believe that its reserves for uncertain tax positions are appropriate.
Abbott is continuing to analyze the Pillar 1 proposal.
The enactment of current Pillar 2 model rules did not and is not projected to have a material impact to Abbott's consolidated financial statements.
Certain product categories requiring review and approval by an independent company, known as a Notified Body, before the manufacturer can affix a CE mark to the product to declare conformity to the Directive.
Areas of Focus In 2025 and beyond, Abbott expects to focus on the following areas: Established Pharmaceuticals — Abbott focuses on building country-specific portfolios made up of high-quality medicines that meet the needs of people in emerging markets.
Over the next several years, Abbott plans to expand its product portfolio in key therapeutic areas and biosimilars with the aim of addressing the health needs of more people in emerging markets and being among the first to launch new off-patent and differentiated medicines.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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