Abbott to Spin Off $8.5 Billion Nutrition Business by End of 2027

Abbott will spin out its nutrition business — roughly $8.5 billion in annual sales spanning Pedialyte, Similac and Ensure — into an independent, publicly traded company, the healthcare giant announced Wednesday.

The split, expected to close at the end of 2027 pending regulatory approval, leaves Abbott with diagnostics, established pharmaceuticals and medical devices, businesses that together generate about $42 billion in sales. When the deal completes, Abbott stockholders will own shares in both companies.

The nutrition unit isn't exactly departing at peak form. It brought in $2.26 billion in the third quarter, up about 5% year over year, but it has dragged on the broader company — and on headlines.

What does the split change for Abbott?

CEO Robert Ford framed the move as a sharpening exercise for both halves of the company, and as a path to "maximize success" in their respective markets.

"Our Nutrition business has a unique opportunity to capitalize on the growing demand for healthy nutrition, and it will be better positioned as an independent company to more effectively direct its strategic resources across its priorities," Ford said in the announcement. "At the same time, Abbott's core higher-growth, innovation-driven portfolio of medical devices, diagnostics and established medicines has compelling growth opportunities to improve the health and lives of people around the world."

Abbott follows a familiar medtech playbook. Medtronic separated its diabetes business earlier this year, and Johnson & Johnson is planning to spin out its orthopedics business.

Wall Street, broadly, approves. J.P. Morgan analyst Robbie Marcus wrote that "the value proposition of the separation is clear - it should improve top-line growth and margins, and remove what's been a difficult business of late, both for Abbott specifically and the packaged goods/nutrition market overall." BTIG's Marie Thibault noted the "Nutrition business had sometimes weighed on total company sales growth, its margins are below the corporate average, and liabilities tied to infant formula litigation remain an overhang."

That last clause is doing real work. Nutrition has sat at the center of lawsuits and a federal investigation tied to the 2022 recall of powdered infant formula over potential contamination — a recall that, along with the temporary closure of a large Michigan plant, helped fuel a national baby formula shortage. In September, Abbott agreed to a $385 million settlement with the Department of Justice to resolve claims, plus lawsuits from certain relators and several state attorneys general. The government closed its criminal investigation, and Abbott maintains the settlement represents no finding of fault or liability. The company also says no unopened, distributed Abbott infant formula has ever tested positive for Cronobacter sakazakii.

There's more. In August, Abbott agreed to pay approximately $670 million to resolve a lawsuit and claims involving about 2,000 individuals over specialty formulas for preterm infants and an alleged connection to necrotizing enterocolitis, a serious gastrointestinal condition affecting mostly premature babies. Abbott called that agreement no admission of liability.

Lawsuits remain pending. Ford told analysts on a Wednesday earnings call that fully resolving litigation is not a "prerequisite for completing the separation." Read that as: the door doesn't wait for the lawyers.

The spinout won't touch Abbott's 2026 or 2027 guidance, which the company will provide in January. Alongside the announcement, Abbott reported third-quarter sales of $13.01 billion, up 14.5% — while trimming its 2026 sales growth outlook to 6%, from a prior range of 6.5% to 7.5%. A cleaner portfolio, then, arrives with slightly cooler expectations attached.