Good morning and thank you for standing by. Welcome to Abbott’s second quarter 2024 earnings conference call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star-one-one keys on your touchtone phone. This call is being recorded by Abbott. With the exception of any participants’ questions asked during the question and answer session, the entire call including the question and answer session is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott’s express written permission. I would now like to introduce Mr. Mike Comilla, Vice President, Investor Relations.

Good morning and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer, and Phil Boudreau, Executive Vice President, Finance and Chief Financial Officer. Robert and Phil will provide opening remarks. Following their comments, we’ll take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2024. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott’s operations are discussed in Item Ia, Risk Factors to our annual report on Form 10-K for the year ended December 31, 2023. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. On today’s conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott’s ongoing business performance. These non-GAAP financial measures are reconciled with comparable GAAP financial measures in our earnings news release and regulatory filings from today, which are available on our website at abbott.com. Note that Abbott has not provided the GAAP financial measure for organic sales growth on a forward-looking basis because the company is unable to predict future changes in foreign exchange rate, which could impact reported sales growth. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert.

Thanks Mike. Good morning everyone and thank you for joining us. Today we reported organic sales growth of more than 9%, excluding COVID testing sales. We also reported adjusted earnings per share of $1.14, which exceeded analyst consensus estimates and represents a 16% sequential increase from the first quarter. Based on our performance in the quarter and confidence in our outlook for the remainder of the year, we raised our guidance and now forecast full year organic sales growth, excluding COVID testing sales, to be 9.5% to 10% and adjusted earnings per share in a range of $4.61 to $4.71. Our performance continues to be driven by broad-based growth across the portfolio with growth this quarter led by double-digit growth in medical devices and high single-digit growth in established pharmaceuticals and nutrition. In addition to benefiting from outperforming expectations on the top line, we are also seeing positive contribution from gross margin expansion coming from continued execution from our supply chain teams, lower commodity costs, and favorable sales mix. I’ll now summarize our second quarter results in more detail before turning the call over to Phil, and I’ll start with nutrition, where sales increased 7.5% in the quarter. Strong quarter in the quarter was led by double-digit growth in international adult nutrition and U.S. pediatric nutrition. International adult nutrition continues to perform at a very high level. The five-year compound annual growth rate of this business is more than 10%, which in addition to our market-leading position and commercial execution reflects the impact from positive demographic trends that drive increasing demand for our Ensure and Glucerna brands. Through the investments we’ve made to expand capacity, we are well positioned to continue to capitalize on these secular demand trends. On the topic of litigation, regarding pre-term infant formula and human milk fortifier, Abbott stands by our products and the information provided to the neonatologist specialists who have used them for decades. Necrotizing enterocolitis, or NEC, is a terrible gastrointestinal disease that primarily affects premature infants, and it is devastating to families; however, plaintiff lawyers are advancing a theory that is without merit or scientific support. These products, which are sold for hospital use, are incorporated into a feeding regimen along with human milk by experienced specialists and are an important part of the standard of care for the majority of preterm infants. Their use is supported by medical associations in the United States and other countries around the world. The products and their ingredients have been reviewed and are deemed safe for use by regulators, who have also reviewed their labels. There has been no increase in the rate of NEC, meaning these cases have not emerged in response to a trend or any new information, yet we’re seeing plaintiffs’ lawyers investing millions of dollars in misleading TV advertising in an attempt to move physician decisions from the hospital to the courtroom. Total revenues for these products are about $9 million annually and have remained at that level for the past several years. If these products were no longer available, physicians would be deprived of the vital food that is needed in the NICU. This would create a public health crisis affecting every state across this country. We believe it’s important for all who have an interest in the health of preterm infants to recognize the need for these products and to take action accordingly. Moving to diagnostics, where sales increased 6% excluding COVID testing sales, growth in the quarter was driven by high single-digit growth in core laboratory diagnostics and double-digit growth in point-of-care diagnostics. In core lab diagnostics, we continued to drive growth through increased adoption and utilization of our market-leading systems and global demand for our extensive testing menus across the areas of immunoassay, clinical chemistry, hematology, and blood screening. While our Alinity family of diagnostic systems first launched more than six years ago, given the long contract cycles common in the diagnostics industry, we continued to see a benefit in our contract renewal and competitive win rates with several recent large account wins expected to increasingly contribute to growth in the second half of the year. Turning to EPD, where sales increased 8% in the quarter, EPD continues to deliver at a high level as this business executes its unique branded generic strategy in emerging markets, where growth is supported by favorable demographic trends, including increasing populations, growing middle classes, and increasing focus on expanding access to healthcare. As you recall, we identified biosimilars as a new strategic growth pillar for this business. With our extensive presence in emerging markets, we have a unique opportunity to scale a licensing model that is capital efficient and can bring access to these life-changing medicines to millions of people in emerging markets. We began implementing this strategy last year when we announced an agreement to commercialize several biosimilars in the areas of oncology and women’s health, with the first of these expected to launch in 2025. We recently completed additional agreements that provide Abbott access to biosimilar versions of market-leading autoimmune disease and GLP-1 medications. Biosimilars represent the highest growth segment in the branded generic pharmaceutical market, and we look forward to continuing to build one of the most complete portfolios in the industry. I’ll wrap up with medical devices, where sales grew 12%, in diabetes care, Freestyle Libre sales were $1.6 billion in the quarter and grew 20%. We announced in June that we received FDA approval for two new over-the-counter continuous glucose monitoring systems called Lingo and Libre Rio, which are based on Libre’s glucose technology that is now used by more than 6 million people around the world. While over-the-counter availability is a new option in the United States, we’ve been selling over-the-counter in international markets since Libre launched 10 years ago. Given our clear leadership position in these markets, we have demonstrated our ability to tailor solutions, approach, and communication for the various types of users who compose the CGM customer base. Lingo is designed for consumers who are willing to improve their overall health and wellness. The Lingo wearable sensor and app will track glucose, provide personalized data, insights, and coaching to help create and maintain healthy habits. Libre Rio is designed for adults with Type 2 diabetes who do not use insulin and typically manage their diabetes through lifestyle modifications. In electro-physiology, growth of 17% was driven by double-digit growth in all major geographic regions, including 17% growth in the U.S., which represents an acceleration compared to the growth in the first quarter. Growth was broad-based across the portfolio and included 20% growth in ablation catheters. In structural heart, growth of more than 15% reflects an acceleration in growth compared to the first quarter and was led by several recently launched products that are driving new adoption and share capture in attractive high growth areas, including TAVR, LAA, and tricuspid repair. This quarter, we launched our tricuspid repair device, TriClip, in the United States and continued our trend of capturing market share in the global TAVR market. In rhythm management, growth of 6% was led by Aveir, our highly innovative leadless pacemaker, and in June we announced that we received CE mark in Europe for Aveir to be used in dual chamber pacing procedures, which is the largest segment of the pacing market. In heart failure, growth of 9% was driven by our market-leading portfolio of heart-assist devices that offer treatment for both chronic and temporary conditions. In neuromodulation, growth of 8% was driven by strong demand in international markets for our Eterna rechargeable spinal cord stimulation device, which obtained CE mark in Europe last year. In vascular, we received FDA approval in late April for our Esprit dissolvable stent, a breakthrough innovation for people who suffer from blocked arteries located below the knee. Esprit is designed to keep the arteries open and deliver a drug to support vessel healing prior to completely dissolving over time. New products like Esprit combined with the investments that we made in our vascular business, both organically and inorganically, have expanded our presence in faster growing areas and increased the future growth outlook for this business. In summary, we exceeded expectations both the top and bottom lines, and as a result, we raised our financial outlook for the year. We continue to make good progress on our gross margin initiatives, and, more importantly, our pipeline continues to be highly productive, and thus we’re well positioned to deliver strong results for the remainder of the year. I’ll now turn over the call to Phil.

Thanks Robert. As Mike mentioned earlier, please note that all references to sales growth rates, unless otherwise noted, are on an organic basis. Turning to our second quarter results, sales increased 7.4% on an organic basis and increased 9.3% when excluding COVID testing sales. Foreign exchange had an unfavorable year-over-year impact of 3.5% on second quarter sales. During the quarter, we saw the U.S. dollar strengthen versus several currencies, which resulted in more unfavorable impact on sales compared to exchange rates at the time of our earnings call in April. Regarding other aspects of the P&L, the adjusted gross margin ratio was 56% of sales. Adjusted R&D was 6.3% of sales, and adjusted SG&A was 27.7% of sales in the second quarter. Lastly, our second quarter adjusted tax rate was 15%. Turning to our outlook for the full year, we now forecast full-year adjusted earnings per share of $4.61 to $4.71, which represents an increase compared to the guidance range we provided in April. We also raised the midpoint of our guidance for organic sales growth. We now forecast organic sales growth excluding COVID testing sales to be in the range of 9.5% to 10%. Based on current rates, we expect exchange to have an unfavorable impact of more than 2.5% on full-year reported sales, which includes an expected unfavorable impact of approximately 3% on third quarter reported sales. Lastly, for the third quarter, we forecast adjusted earnings per share of $1.18 to $1.22. With that, we’ll now open the call for questions.

Thank you. At this time, we will conduct a question and answer session. Our first question will come from Larry Biegelsen from Wells Fargo. Your line is now open.

Good morning. Thanks for taking the question, and Robert, congratulations on a nice quarter. Thanks for your comments on the NEC litigation. I’m wondering if you have anything to add on that, Robert, and then I have one follow-up question.

No Larry, I think I covered everything during my prepared comments. The only additional point I want to make is that I believe the impact has been exaggerated. We are actively working to defend our position and are engaging with all the different stakeholders to ensure they understand the situation and its seriousness as it develops. I have shared everything I intended to in my prepared remarks, and if there is a need for further updates, we will provide them.

All right, thanks. Separately, Robert, your EPD business grew nicely in the second quarter, 17% in both the U.S. and international. What drove that, what are you seeing with PFA in the different geographies, and how are you thinking about the sustainability of that growth before bolt launches? Thank you.

Sure, I’m observing what I anticipated. It might differ from some expectations, but we are clearly witnessing a market increase, with growth accelerating above 20%. Although our 17% growth is below the market average, it is actually faster than our pre-pandemic growth and the period immediately following our acquisition. We'll see if this growth translates into a rise in procedures. We are involved in more procedures than before, thanks to our mapping and teams, but it’s a bit early to determine if the number of procedures will see a significant increase. While the market is accelerating, the current growth is largely driven by price due to the introduction of a new product, primarily utilized in new procedures and atrial procedures, which we estimate to account for about a third of all ablation procedures. The remaining two-thirds, including re-dos and various ablations, continue to favor RF as the preferred option. We will monitor how this evolves over time, but internationally, penetration sits around 10% to 15%, remaining stable. Regarding mapping, there hasn’t been a notable change from the initial launch period to now, with over 90% of U.S. cases still relying on mapping, where we hold a 50% market share. I avoid using varied denominators for market share assessments, focusing on ensuring my team has the best access, which reflects a 50% share. RF catheters are still utilized in about 20% of PFA cases, consistent with previous reports. Overall, the market is growing and accelerating, and we maintain a strong position. Our ongoing opportunities with mapping and consumables are still intact. RF continues to play an essential role, and our business has grown faster than before. In 2019, we reported approximately 12% growth, and in 2018 about 14%, indicating our current performance is an improvement. This is positive for the market, which is why we are heavily investing in our PFA portfolio, expected to see market entry next year, though I won't specify a quarter. This is promising, and the teams have executed our strategy exceptionally well, so they deserve recognition.

Thanks so much. Thanks for the comprehensive answer.

Thank you. Our next question will come from Travis Steed from BofA Securities. Your line is open.

Hey, congrats on the good quarter. I wanted to ask about structural heart - really stood out this quarter, accelerated from last quarter. Just curious how much of that is on MitraClip recovery, you got TriClip approved early, how much you’re seeing from the TriClip side and how much is coming in from some of the other newer products, like Amulet and Navitor.

Sure. Obviously, TriClip was an important launch and helped to accelerate the growth rate, Travis, but I think it’s pretty broad-based here. I mean, if you look at TriClip, we were ready to go because we had certain built-in advantages in this area, right - we had the scale, we had the sales force, the manufacturing capacity, so we were ready to go. I think from our estimates here, even though we launched a quarter after our competitor with their system, I think the repair device is already in twice as many accounts as the replacement system, so we had a natural kind of built-in advantage here as we went to the market, and the cases are doing very well. The feedback has been very positive. But I think it’s really broad-based here. Navitor has done very well, both in international markets and in the U.S., and the value proposition is starting to gain more traction - you know, great clinical profile, excellent hemodynamics, and that’s driving a lot of opportunity for us in international and U.S. markets. We shared some data from our registry, from our Japan registry, and great safety also, so that’s doing very well. Amulet, we saw really nice growth in the U.S. for Amulet this quarter - it was about 45%, so that product is doing very well and we’re focusing here on continued, what I would call penetration in same store sales, so we’re about close to 20% in the accounts that we’re in. We’re in about half of the market here in the U.S., so our opportunity here is to continue to expand the sales force and go to newer accounts, so that’s done very well, too. MitraClip, I think we continue to see some continued growth internationally. In the U.S. with competitive activity, that’s kind of slowed down a little bit of the growth, but I think with TriClip now coming into the market and gaining traction, we’ll be able to provide a value proposition across both repair systems and drive there. So structural heart, the growth rate has accelerated from Q1, doing very well, and I’d say it’s really across a full portfolio approach versus just really trying to single out one product or one technology. There’s work we have to do in MitraClip - that’s clear, in the U.S., internationally it’s done very well; but all the other products that I’ve talked about are doing very well and gaining market share, and gaining adoption, so that’s why you saw structural heart’s growth rate actually accelerate, and I continue to see that that’s going to be definitely for the rest of this year and going into next year.

That’s super helpful. Then on your sensor business, how are you thinking about segmenting the market with Lingo versus Rio, and how do you think those markets are going to develop over time? When you look at your core Libre business, anything to call out, any changes in U.S. versus international market dynamics?

You’re asking quite a comprehensive question. We could easily spend an entire call discussing this topic. At a high level, Libre is performing very well, and there are significant growth opportunities ahead. The basal market is the most promising, and we are making excellent strides there. However, even within the multiple daily injectors segment, there is considerable room for growth. In the U.S., roughly a third of those using multiple daily injections are not utilizing continuous glucose monitoring, and in developed international markets, that figure rises to about 50%, indicating ample growth potential for Libre. Our strategy with Lingo and Libre Rio is to create a comprehensive product offering and treat this as a platform to broaden the use of sensor technology across various diabetes groups, as well as to target a larger market consisting of individuals without diabetes. Currently, we plan to launch in the U.S. and begin expanding globally, assessing the landscape and our requirements for success. From our experience in the U.K., we recognize that educating patients—who are eager to adopt new tools for healthier living—takes time. Nonetheless, I see this as a significant opportunity, one that we have heavily invested in to position ourselves effectively. If we consider Lingo and examine the adult populations in the U.S. and Western Europe, there are approximately 400 million individuals in those markets. With even a modest single-digit penetration rate, translating to a few sensors annually, we are looking at a multi-billion dollar opportunity—an area we have yet to fully tap into. Once we gain a clearer understanding of how this will unfold, we will be more adept at forecasting; however, at a high level, the overall adult population combined with what I consider modest market penetration reflects substantial opportunity. As I mentioned earlier, we have been active in international markets for some time now, and we have acquired valuable insights that we intend to apply in the U.S., which presents an exciting prospect for us.

Great, thanks Robert.

Thank you. Our next question will come from Robbie Marcus from JP Morgan. Your line is open.

Oh great, thanks. I’ll add my congratulations on a good quarter. Two for me, two product questions. Maybe just to follow up on the diabetes Libre question, Robert, how are you thinking about a holistic drive of advertising and word of mouth for these new products, especially as we move into the OTC, versus generating data, and how much will be necessary? I think back five years ago, and where we are today was probably not in most people’s forecasts, and with the amount of data we have showing in non-diabetics how beneficial CGM is, how are you thinking about data versus not data, insurance coverage versus not insurance coverage, and how do the markets look one way or the other?

From an insurance coverage standpoint, particularly regarding Lingo for non-diabetics, we’re not planning to forecast reimbursement for it, although I agree that there is compelling data indicating that non-diabetics can benefit from it, especially in terms of maintaining behavior modification. The essence of this product is to utilize data to help individuals who want to stay healthy by providing them with more information, enabling them to refine or change their habits. This is fundamentally about communicating directly with consumers. In the diabetes arena, the uptake of CGM required effective communication with both patients and physicians. This remains crucial for non-diabetics as well. Some individuals may seek acknowledgment from healthcare professionals regarding the potential value of this investment. Utilization is key; I don’t expect non-diabetics to use the sensor year-round, but even sporadic use can yield benefits, and we’ll continue to gather data on this over time. Generating data is essential, not only to inform payors for reimbursement but also to demonstrate value to primary care physicians and direct consumers. Personalization is vital in tailoring information, data, and coaching. Therefore, while we will utilize television advertising to communicate, our past experiences suggest that simply relying on broad TV advertising won’t drive significant uptake. We'll need to combine traditional advertising with grassroots marketing to effectively penetrate and sustain the market. This is the strategy we’re pursuing, which is why we have established a dedicated team separate from the Libre and diabetes division to implement this approach. I envision a gradual growth trajectory rather than immediate results. While there’s a lot of focus on second-half sales numbers, the wider perspective is that there’s a substantial opportunity here. If executed correctly, this opportunity could evolve into something enduring and standardized rather than being just a fleeting trend.

Great color. One more from me - Aveir and the leadless pacing, particularly the dual chamber now with coverage, I think is an underappreciated opportunity. Maybe if you don’t mind, spend a minute there, how you see this market evolving, and what’s the early feedback on the launch so far? Thanks.

I believe that the leadless technology is going to significantly change the growth trajectory of our CRM business. CRM experienced a 7% growth last year, and it has also grown 7% in the first half of this year after being stagnant previously. We've been achieving this success with dual chamber systems, but we're not at full potential yet because we need to ensure that we provide adequate training and help physicians become comfortable with the new procedure. This approach is quite different from what the industry has historically used. We're utilizing mapping and accessing through the groin instead of using pockets above the chest, which is a notable change, and we are concentrated on that. However, we've managed to increase the growth rate with just a single chamber. I estimate we've captured about 50% of the market after two years, but as you mentioned, there's a larger opportunity with dual procedures, which are progressing well. Once physicians have performed several procedures, they are eager to explore how to enhance the process and attract more patients. Our priority is to ensure we have a large base of well-trained physicians achieving excellent patient outcomes across the U.S. This global segment is valued at $3 billion, and there has been limited innovation. We are introducing something genuinely unique and differentiated. Once we are confident in our capabilities, training, and physician coverage, I can envision this product becoming more mainstream with increased direct communication to consumers due to the value it provides. This presents a significant opportunity for us, which may be undervalued in the market but is recognized and appreciated within our team, and we are diligently working towards realizing its potential.

Great, thank you very much.

Thank you. Our next question will come from Josh Jennings from TD Cowen. Your line is now open.

Good morning, thanks for taking the questions. Robert, I wanted to just start asking about just this multi-year trajectory for Abbott. You’ve been delivering top-tier organic revenue growth performance over the last two years and potentially have a two-year double-digit stacked comp next year, but I think the team has been publicly stating that potentially the business could outpace pre-pandemic levels, which were in that 7% to 8% range. I think during this call, you’ve put forward a lot that supports that type of trajectory, but maybe just to reiterate your confidence level there, and is this kind of outpacing your pre-pandemic levels over the medium term dependent on M&A, or is this the core business with internal development programs that’s really going to drive this top-tier growth out over the next couple of years?

Was that an attempt to ask about the 2025 outlook? I would say that we have been clear about our investments during COVID to strengthen the company and grow our portfolio for accelerated growth. Over the last six quarters, we have demonstrated impressive high single-digit to double-digit growth in a company generating over $40 billion in revenue. If you look at our med tech portfolio, it was the fastest-growing segment last year and continued to grow rapidly in the first quarter of this year. We’ll see how the second quarter goes, but we have positioned the company to sustain this performance, and I am confident we can maintain this strong growth throughout this year and into next year. This confidence stems from what we have built and the consistent results we have achieved. We are participating in attractive markets where we hold leadership positions, and as those markets grow, our leadership benefits. We are also entering new attractive markets where there is significant potential for gaining market share. Additionally, we are developing products for markets that lack clinical opportunities, and as we establish our presence there, they become more appealing. This strategy applies across all four of our business units, which have opportunities within these frameworks. Regarding M&A, if we identify a strategic and financially sound asset that could contribute to our growth, our balance sheet allows for that investment; however, my focus remains primarily on organic growth to achieve this top-tier performance.

Thank you for your response. I have a high-level question that I believe you receive often. It’s our understanding that your team and the Board evaluate the strategic alignment of the four major business units at least once a year, and sometimes more frequently. Could you provide an update on your perspective regarding business combinations and the possibility of future spin-offs? Thank you.

Well, we look at our portfolio on an ongoing basis. I don’t think there’s this one moment in the year that we do it - we’re doing it on an ongoing basis, and the company has a history of ensuring that the portfolio that is assembled is not only delivering value to patients and governments and healthcare systems, but it’s also delivering value to our shareholders. We historically haven’t shied away from asking ourselves the questions and answering those questions, and if there’s an opportunity to create value through addition or through subtraction, then the company has shown that it’s ready to do that. I think the two fundamental questions about that is, is there an opportunity to create value for shareholders, and is there somebody that could do better with our businesses? Right now, you look at what we’re doing with our businesses, we’re performing at the highest level across all of the four segments. We’ll see what happens during this earnings season here, but I feel very good about the team and what they’re doing. Obviously, there are areas that we could always do better, and we focus on that; but at the highest level, all four of our sectors have been delivering outstanding growth, market-leading growth, and quite frankly innovating and fulfilling our purpose and our mission, which is to help people live healthier lives. I like the diversity. The diversity provides both defense and offense capabilities, and as long as you’re managing them within each one of their segments, allocating capital that is proportionate to their growth and their industry, and we spend a lot of time managing all four segments, then I think we’re doing a good job at running them.

Great, thanks a lot.

Thank you. Our next question will come from David Roman from Goldman Sachs. Your line is open.

Thank you and good morning everybody. I was hoping to ask one question on the P&L side and one on the capital allocation side. Maybe I’ll start with the P&L here. As I kind of look at the guidance here for the back half of the year, our math implies it’s something like 100 basis points-plus of year-over-year operating margin expansion, and about 9% EPS growth at the midpoint of the range. Can you maybe talk through some of the drivers that underpin that margin expansion on a year-over-year basis? Obviously we saw a turn here in Q2 versus what we saw in Q1, but maybe walk us through some of the drivers that get to that improved margin and earnings growth performance in the back half of the year.

Sure, I’ll let Phil take that.

Yes, good morning David. Robert mentioned our expansion earlier this year, and we find ourselves in a unique position compared to some of our competitors regarding our operating margin profile, as we have returned to pre-pandemic levels. We achieved this strategically by managing our spending amidst the fluctuations of COVID testing. As we discussed earlier this year, the first quarter was the last significant comparison affected by COVID testing on our sales and profiles. Concerning margin expansion, particularly gross margin, our guidance for the year indicates an increase of around 75 basis points, showing progress with potential for more. Our focus remains on areas under our control and execution, especially the strong contributions from our sales performance in growth-oriented businesses, which we expect will continue to improve throughout the year. We have dedicated teams in each business focused on enhancing gross margin, improving productivity yields, reducing costs, and fostering innovation to augment our portfolio. All these factors consistently contribute quarterly and will continue to do so throughout the year. Additionally, we've observed cycles in commodities markets and inflation over the past few years starting to stabilize and normalize. Freight and distribution costs are also normalizing and are beginning to act as a tailwind rather than a headwind. We are seeing commodity markets stabilize and decline, further benefiting our gross margin, and we expect this trend to continue. All these elements reinforce our confidence in sustaining top-tier sales performance while also expanding margins throughout the year.

Super helpful, thank you. Then maybe just on the capital allocation side, maybe thinking about the other side of Josh’s question, if you look across the sector here, we’ve seen M&A pick up a little bit in the second quarter - I think there were two billion dollar-plus transactions announced with transaction multiples starting to trend toward the lower end of historical levels. But could you maybe give us your latest perspective on the M&A environment and how you’re thinking about capital allocation as your cash balance continues to build nicely here?

Regarding capital allocation, I have consistently emphasized during our calls that we maintain a balanced approach. We recognize that different companies adopt various strategies, but we believe our balanced method serves the long-term interests of our shareholders. One key metric I consider important for assessing the effectiveness of capital deployment is Return on Invested Capital (ROIC). Over the past three years, our ROIC has averaged in the high teens, which positions us favorably compared to our med tech peers. This metric reflects our effective capital deployment, and as part of our balanced approach, we evaluate internal capital investments that promote future growth. We have discussed numerous promising opportunities, and we are funding these initiatives, which are expected to yield strong returns. In terms of debt reduction, we don’t have significant obligations this year, but we addressed some debt last year to avoid refinancing. Our dividend policy is integral to our investment identity, and we plan to continue increasing our dividend, reinforcing our balanced approach. Additionally, we are exploring opportunities from a balance sheet perspective, focusing on mergers and acquisitions (M&A). Our strong top-line performance and developed pipeline allow us to be selective in our M&A strategy. When observing other transactions, it's essential to consider the underlying strategy, especially when companies are striving to maintain their growth rates. If a business relies on acquisitions for growth, it must continue pursuing them, regardless of whether valuations are favorable. Our focus is on strategic alignment, ensuring that any potential acquisition can generate attractive returns and improve the acquired business. We do not aim to acquire simply to hold; our acquisition framework prioritizes strategic fit, potential for attractive returns, and enhancing the operations of the acquired company, thus creating greater value than when they were independent.

Appreciate all the perspective, and thanks for taking the question.

Thank you. Our next question will come from Danielle Antalffy from UBS. Your line is open.

Good morning, everyone. Thank you for taking my question. Congratulations on a really strong quarter. Robert, something that caught my attention during our last conversation was your perspective on the sustainability of businesses that have historically experienced slower growth, particularly in markets that typically show slower growth, such as CRM. Could you elaborate on the strategy there? Aveir plays a significant role in this, as does the overall pacing of leadless technology. It’s impressive that we have seen several quarters of organic growth in the mid-single-digit range. I have another product-related question to follow up on.

Yes, that was part of our strategy as we assessed our med tech portfolio. We identified high growth drivers such as EDP, structural heart, diabetes care, neuro, and heart failure. In contrast, CRM and vascular have shown flat growth. As a result, our med tech portfolio was growing around 7% to 9% per quarter. To reach double-digit growth, we needed CRM and vascular to improve to at least mid-single digits. Our strategy for CRM focused on Aveir leadless pacemakers, and while we have made advancements there, we are also exploring opportunities in the ICD market for further innovation. There is potential for growth, particularly in the diabetes market, which has seen significant transformation over the past 15 years. By addressing unmet needs through innovation, we can revitalize a market. Regarding vascular, we have been working on repositioning the portfolio towards higher growth areas like peripheral and endovascular sectors. Although we initiated this process later compared to CRM, I anticipate that our vascular business will start contributing to a higher growth rate in the same way CRM has. This will enhance our overall med tech portfolio and help us achieve our target growth rate of 12% to 13%.

Okay, that’s helpful. Then the follow-up question is on the structural heart side of things, and I know Amulet has been on the market for a little bit here, but my impression is that now it’s kind of like Abbott is no longer fighting with one hand tied behind their back. Can you talk a little bit about that, and your 45% growth, I think you said in the quarter, where to from here for Amulet? Thanks so much for taking the questions.

It was a great quarter, and I'm pleased to see the team gaining momentum. Our main focus has been on increasing adoption in existing centers rather than expanding into new ones. The competition has broadened the market, with around 800 centers offering these implants, and we're active in about half of them. This is positive as it indicates market growth in the U.S. I'm encouraged by the data we’ve gathered, particularly from our patient registry, which showed that we achieved a 95% closure rate post-implant, sustained after 45 days. We also noted a 90% success rate using Amulet for patients who didn’t achieve the desired closure with a competing product. This highlights our value proposition and underscores the need for continued investment. We're already putting resources into developing the next-generation Amulet, aiming to improve ease of use while maintaining our superiority in sealing LEA. We're also investing in clinical trials, including the Catalyst trial, which will compare Amulet to NOAC and ablation treatments. This is an exciting opportunity for us, and we will keep investing. Ultimately, our goal is to provide electrophysiologists with a comprehensive portfolio that includes pacemakers, ICDs, structural heart interventions for stroke prevention, and ablation treatments for AF. At its core, Amulet plays a crucial role in equipping physicians with the necessary tools to enhance patient care.

Operator, we’ll take one more question, please.

Thank you. Our final question will come from Vijay Kumar from Evercore ISI. Your line is open.

Hi Robert. Thanks for taking my question, and congrats on a nice sprint here. I wanted to touch on biosimilars - you know, you brought this up on the call. Can you elaborate on your strategy there? Are you planning to manufacture these products? Is Abbott going to be a CDMO in that space or do you plan to launch your own biosimilars, or is this more of Abbott being a distributor and taking advantage of your brand presence in emerging markets? What is Abbott’s role in that place, and how do you size that market opportunity for Abbott? When should that start contributing to Abbott?

Certainly. There are several phases to our strategy. The main idea is that the disease prevalence in emerging markets is comparable to that in the U.S. and Europe. While some conditions may be more prevalent in certain areas, overall, there's a significant opportunity to introduce biologics into these markets. Historically, these markets haven't been prioritized by originators, who have focused more on developed regions like the U.S., Western Europe, Japan, Canada, and Australia. This creates a clear opportunity to meet patient needs. Our experience with regional biosimilar deals shows that once a biosimilar enters the market, the growth of the molecule significantly increases in terms of patient penetration. Although dynamics vary between developed and emerging markets, the latter tends to see substantial expansion in this category. Therefore, before we move forward with manufacturing, we want to understand how these products will be adopted after we invest in developing them in emerging markets. We are well-positioned with existing relationships with governments, physicians, and distribution networks, which gives us an edge over competitors focused on developed markets. The challenge is executing this strategy in a cost-effective way that maintains our gross margins. I commend our team for establishing our presence in these markets, which can benefit players who are not prioritizing emerging markets. Right now, we are assessing the sustainability of our efforts. The deals we’ve established provide access without diluting our gross margin, and we will monitor our progress. We anticipate launching products in 2025, and significant opportunities in oncology will arise in 2026 and 2027, which could greatly accelerate our growth.

That’s helpful. Maybe one last one on capital deployment. I know it’s been asked - I’m curious on share repurchases. You guys have done phenomenal growth. The street doesn’t seem to be giving credit. Why not? You didn’t see any share repurchase in the first half. Why is Abbott being conservative on share repurchases?

We have conducted significant share repurchases over the past few years, especially to make up for reduced activity following our acquisitions in 2017 and 2018. In the last four years, we have returned approximately $20 billion to shareholders through repurchases and dividends. This has represented a substantial portion of our free cash flow during this time. While the year isn’t over yet, we still see ample opportunities for further repurchases. Overall, I believe we have effectively returned cash to our shareholders in recent years, and we intend to continue this commitment. I’ll just close here. This was a great quarter for us, and, honestly, it has been a great quarter in relation to the previous five quarters, during which we achieved above-market growth. I’m really pleased with our ongoing strong performance. We’ve increased our sales outlook and our EPS ranges for the second time this year. The toughest COVID test comparisons are now behind us, so I look forward to reporting our COVID testing sales while seeing those comparisons begin to diminish, which means our EPS is back to growth. I think one of the questions was about showing our EPS exiting the year in the high single digits or double-digit range and getting back to our formula. That’s what we’re focused on, and we have a lot of positive momentum heading into the second half of the year. With that, we’ll wrap up, and thank you for joining us.

Thank you Operator, and thank you all for your questions. This now concludes Abbott’s conference call. A webcast replay of this call will be available after 11:00 am Central time today on Abbott’s Investor Relations website at abbottinvestor.com. Thank you for joining us today.

Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.