Financial Analysis

Note 6 Business Acquisition On March 23, 2026, Abbott completed the acquisition of Exact Sciences for approximately $20.6 billion. The acquisition was funded primarily through the issuance of $20.0 billion of long-term debt in March 2026, with the remainder funded by cash on hand. Under the terms of the agreement, Abbott paid $105 per common share in cash. As part of the acquisition, Abbott assumed approximately $2.8 billion of Exact Sciences debt, nearly all of which was repaid as of June 30, 2026. The acquisition of Exact Sciences has established Abbott's position in the cancer diagnostics market and expands its portfolio to include products such as Cologuard , Oncotype DX , and Cancerguard . The preliminary allocation of the fair value of the Exact Sciences acquisition is shown in the table below. Allocation of the purchase price of the acquisition will be finalized when the valuation of assets and liabilities is completed and differences between the preliminary and final allocation could be material. (in billions) Acquired intangible assets, non-deductible $ 12.8 Goodwill, non-deductible 11.4 Acquired net tangible assets 0.4 Deferred income taxes recorded at acquisition (2.0) Net debt (2.0) Total preliminary allocation of fair value $ 20.6 The goodwill is primarily attributable to future growth opportunities, assembled workforce, potential future technologies, and other intangible assets that do not qualify for separate recognition, as well as expected synergies from comb …

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Note 12 Litigation and Environmental Matters Abbott has been identified as a potentially responsible party for investigation and cleanup costs at a number of locations in the United States and Puerto Rico under federal and state remediation laws and is investigating potential contamination at a number of company-owned locations. Abbott has recorded an estimated cleanup cost for each site for which management believes Abbott has a probable loss exposure. No individual site cleanup exposure is expected to exceed $4 million, and the aggregate cleanup exposure is not expected to exceed $10 million. Abbott has been named as a defendant in a number of lawsuits alleging that its preterm infant formula and human milk fortifier products that contain cows milk ingredients cause an intestinal disease known as necrotizing enterocolitis (NEC) and inadequately warn about the risk of NEC. These lawsuits claim that certain preterm infants suffered injury or death as a result of contracting NEC. Several of these matters have progressed to a decision, with varying outcomes. In the first three federal Multidistrict Litigation (MDL) bellwether cases before the U.S. District Court for the Northern District of Illinois, Abbott prevailed on summary judgment. Outcomes in the state court cases have varied, ranging from a summary judgment ruling in Abbotts favor to a plaintiff verdict awarding $495 million in damages. Several of these cases are at various stages of appeal. Abbott stands by its product …

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Note 10 Debt and Lines of Credit In March 2026, Abbott issued $20.0 billion of debt to finance the acquisition of Exact Sciences, as follows: (in millions) Principal amount SOFR+ 50 bp Senior notes due 2029 $ 1,000 3.700% Senior notes due 2029 $ 2,250 4.000% Senior notes due 2031 $ 2,500 4.300% Senior notes due 2033 $ 2,750 4.650% Senior notes due 2036 $ 3,750 4.750% Senior notes due 2038 $ 2,000 5.500% Senior notes due 2056 $ 3,750 5.600% Senior notes due 2066 $ 2,000 As part of the acquisition, Abbott assumed approximately $2.8 billion of Exact Sciences debt, nearly all of which was repaid as of June 30, 2026. On September 15, 2025, Abbott repaid the $500 million outstanding principal amount of its 3.875% Notes upon maturity. On March 17, 2025, Abbott repaid the $1.0 billion outstanding principal amount of its 2.95% Notes upon maturity. …

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The following tables provide detail by sales category: Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 (in millions) U.S. Intl Total U.S. Intl Total Established Pharmaceutical Products Key Emerging Markets $ $ 1,164 $ 1,164 $ $ 1,059 $ 1,059 Other 335 335 324 324 Total 1,499 1,499 1,383 1,383 Nutritional Products Pediatric Nutritionals 525 500 1,025 587 467 1,054 Adult Nutritionals 346 773 1,119 370 788 1,158 Total 871 1,273 2,144 957 1,255 2,212 Diagnostic Products Core Laboratory 377 1,041 1,418 351 1,007 1,358 Rapid and Molecular 393 362 755 460 355 815 Cancer Diagnostics 890 29 919 Total 1,660 1,432 3,092 811 1,362 2,173 Medical Devices Rhythm Management 377 366 743 340 333 673 Electrophysiology 420 441 861 362 393 755 Heart Failure 313 88 401 282 86 368 Vascular 294 509 803 283 474 757 Structural Heart 225 372 597 249 332 581 Neuromodulation 189 71 260 193 61 254 Diabetes Care 862 1,326 2,188 794 1,187 1,981 Total 2,680 3,173 5,853 2,503 2,866 5,369 Other 5 5 5 5 Total $ 5,216 $ 7,377 $ 12,593 $ 4,276 $ 6,866 $ 11,142 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (in millions) U.S. Intl Total U.S. Intl Total Established Pharmaceutical Products Key Emerging Markets $ $ 2,253 $ 2,253 $ $ 2,024 $ 2,024 Other 672 672 619 619 Total 2,925 2,925 2,643 2,643 Nutritional Products Pediatric Nutritionals 1,036 942 1,978 1,175 920 2,095 Adult Nutritionals 679 1,504 2,183 737 1,526 2,263 Total 1,715 2,446 4,161 1,912 2,446 4,358 Diagnostic Products C …

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Note 9 Incentive Stock Programs In the first six months of 2026, Abbott granted 2,000,814 stock options, 449,237 restricted stock awards, and 4,999,652 restricted stock units under its incentive stock program. At June 30, 2026, approximately 140 million shares were reserved for future grants. This reserve reflects the shares authorized by Abbott's shareholders in April 2026. Information regarding the number of options outstanding and exercisable at June 30, 2026, is as follows: Outstanding Exercisable Number of shares 22,967,126 19,455,098 Weighted average remaining life (years) 4.7 3.9 Weighted average exercise price $ 95.21 $ 90.62 Aggregate intrinsic value (in millions) $ 227 $ 227 In connection with the completion of the Exact Sciences acquisition, unvested Exact Sciences restricted stock units were converted into Abbott restricted stock units, in accordance with the merger agreement. The number of restricted stock units converted was 1,476,916 at a fair value of $105.62. The total unrecognized share-based compensation cost at June 30, 2026, amounted to $774 million, which is expected to be recognized over approximately the next three years. …

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Note 7 Goodwill and Intangible Assets The total amount of goodwill reported was $35.2 billion at June 30, 2026, and $24.0 billion at December 31, 2025. Goodwill increased by $11.4 billion in the first six months of 2026 due to the completion of the Exact Sciences acquisition. F oreign currency translation adjustments decreased goodwill by $0.2 billion in the first six months of 2026. The amount of goodwill related to reportable segments at June 30, 2026, was $2.7 billion for the Established Pharmaceutical Products segment, $0.3 billion for the Nutritional Products segment, $15.0 billion for the Diagnostic Products segment, and $17.3 billion for the Medical Devices segment. The Diagnostic Products segment includes the amount of goodwill related to the Exact Sciences acquisition. There were no reductions of goodwill relating to impairments in the first six months of 2026. The gross amount of amortizable intangible assets, primarily product rights and technol ogy, was $39.8 billion as of June 30, 2026, and $27.6 billion as of December 31, 2025. The gross amount of amortizable intangible assets increased by $12.3 billion in the first six months of 2026 due to the completion of the Exact Sciences acquisition. Accumulated amortization was $24.3 billion and $23.3 billion as of June 30, 2026, and December 31, 2025, respectively. Abbotts estimated annual amortization expense for intangible assets is approximately $2.6 billion in 2026, $2.3 billion in 2027, $1.8 billion in 2028, $1.7 b …

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Note 14 Taxes on Earnings Taxes on earnings reflect the estimated annual effective rates and include charges for interest and penalties. In the first six months of 2026 and 2025, taxes on earnings included $18 million and $84 million, respectively, in excess tax benefits associated with share-based compensation. In the first six months of 2026 and 2025, taxes on earnings included approximately $440 million and $300 million, respectively, of tax expense related to a deferred tax asset that was recognized as a significant non-cash tax benefit in a prior year. In the first six months of 2026 and 2025, taxes on earnings also included approximately $60 million of net tax expense and $90 million of net tax benefit, respectively, primarily as the result of the resolution of various tax positions related to prior years. 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. The primary adjustments proposed in the SNOD relate to the reallocation of income between Abbotts U.S. entities and its foreign affiliates. Abbott believes that the income reallocation adjustments proposed in the SNOD are without merit, in part because certain adjustments contradict methods that were agreed to with the IRS in prior audit periods. The SNOD also contains other proposed adjustments that Abbott believes are erroneous and unsupported. Abbott filed a petition with the U.S. Tax Court contesting the SNOD in Decem …

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Recent Accounting Standards Not Yet Adopted In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures , which requires an entity to disclose on an annual and interim basis, disaggregated information about specific income statement expense categories. The guidance should be applied prospectively with the option to apply the standard retrospectively. The standard becomes effective for Abbott for full year 2027 reporting. Abbott is currently evaluating the impact of this new standard on its consolidated financial statements.

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Note 8 Restructuring Plans In 2025, Abbott management approved plans to streamline operations in order to reduce costs and improve efficiencies in its diagnostics and medical devices businesses. In addition, Abbott recognized asset impairment charges of $12 million related to these restructuring plans in the first six months of 2025. The following summarizes the activity related to these restructuring actions and the status of the related accruals as of June 30, 2026: (in millions) Total Accrued balance at December 31, 2025 $ 180 Payments and other adjustments (76) Accrued balance at June 30, 2026 $ 104 …

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Note 3 Revenue Abbotts revenues are derived primarily from the sale of a broad portfolio of healthcare products under short-term receivable arrangements. Abbott has four reportable segments: Established Pharmaceutical Products, Nutritional Products, Diagnostic Products, and Medical Devices. The following tables provide detail by sales category: Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 (in millions) U.S. Intl Total U.S. Intl Total Established Pharmaceutical Products Key Emerging Markets $ $ 1,164 $ 1,164 $ $ 1,059 $ 1,059 Other 335 335 324 324 Total 1,499 1,499 1,383 1,383 Nutritional Products Pediatric Nutritionals 525 500 1,025 587 467 1,054 Adult Nutritionals 346 773 1,119 370 788 1,158 Total 871 1,273 2,144 957 1,255 2,212 Diagnostic Products Core Laboratory 377 1,041 1,418 351 1,007 1,358 Rapid and Molecular 393 362 755 460 355 815 Cancer Diagnostics 890 29 919 Total 1,660 1,432 3,092 811 1,362 2,173 Medical Devices Rhythm Management 377 366 743 340 333 673 Electrophysiology 420 441 861 362 393 755 Heart Failure 313 88 401 282 86 368 Vascular 294 509 803 283 474 757 Structural Heart 225 372 597 249 332 581 Neuromodulation 189 71 260 193 61 254 Diabetes Care 862 1,326 2,188 794 1,187 1,981 Total 2,680 3,173 5,853 2,503 2,866 5,369 Other 5 5 5 5 Total $ 5,216 $ 7,377 $ 12,593 $ 4,276 $ 6,866 $ 11,142 Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 (in millions) U.S. Intl Total U.S. Intl Total Established Pharmaceutical Products Key Eme …

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Note 15 Segment Information Abbotts principal business is the discovery, development, manufacture, and sale of a broad portfolio of healthcare products. Abbotts products are generally sold directly to retailers, wholesalers, consumers, hospitals, healthcare facilities, laboratories, health systems, and government agencies throughout the world. On March 23, 2026, Abbott completed its acquisition of Exact Sciences. From the acquisition date, Abbott's results include Exact Sciences' results, which are reported within the Diagnostic Products segment as Cancer Diagnostics. Abbotts reportable segments are as follows: Established Pharmaceutical Products International sales of a broad line of branded generic pharmaceutical and biologic products. Nutritional Products Worldwide sales of a broad line of adult and pediatric nutritional products. Diagnostic Products Worldwide sales of diagnostic systems, tests, and automated solutions. For segment reporting purposes, the Core Laboratory Diagnostics, Rapid and Molecular Diagnostics, and Cancer Diagnostics businesses are aggregated and reported as the Diagnostic Products segment. Medical Devices Worldwide sales of rhythm management, electrophysiology, heart failure, vascular, structural heart, neuromodulation, and diabetes care products. For segment reporting purposes, the Rhythm Management, Electrophysiology, Heart Failure, Vascular, Structural Heart, Neuromodulation, and Diabetes Care businesses are aggregated and reported as the Medical …

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