Good morning and thank you for standing by. Welcome to Abbott’s Fourth Quarter 2024 Earnings Conference Call. All participants will be able to listen only until the question-and-answer portion of this call. This call is being recorded by Abbott. With the exception of any participant’s 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 2025. 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 1A, 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 the 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 related GAAP financial measures on a forward-looking basis, for the non-GAAP financial measures for which the company is providing guidance because the company is unable to predict with reasonable certainty and without unreasonable effort, the timing and impact of certain items, which could significantly impact Abbott's results in accordance with GAAP. 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. First, I want to express gratitude to my Abbott colleagues around the world whose hard work and passion are the driving forces behind Abbott's continued success. Abbott's commitment to innovation, operational excellence and serving the needs of our customers resulted in another year of exceptional performance, which included achieving sales growth of 9.5%, excluding COVID testing, delivering 70 basis points of gross margin profile improvement, driving acceleration in the growth of our earnings per share throughout the year and developing and advancing new products through our rich pipeline. The strong performance resulted in generating $8.5 billion of operating cash flow, which was used to reinvest in the business, fund capacity expansions, repay debt, and return $5 billion to shareholders in the form of dividends and share repurchases. These accomplishments played a key role in continuing our well-established track record for delivering on our financial commitments, which included achieving results that finished at the high end of our initial guidance ranges we provided for 2024. These results included exiting the year with very strong momentum as fourth quarter sales grew 10%, excluding COVID testing sales, and adjusted earnings per share increased 13% versus the prior year. For 2025, we're well positioned to deliver another year of strong growth. As we announced this morning, we forecast organic sales growth to be in the range of 7.5% to 8.5% and adjusted earnings per share to be in the range of $5.05 to $5.25, which reflects double-digit growth at the midpoint. I'll now summarize our fourth quarter results in more detail before turning the call over to Phil. I'll start with Nutrition. Our sales increased 7% in the quarter, driven by double-digit growth in adult nutrition, led by our market-leading Ensure and Glucerna brands. We achieved a significant milestone last year with annual sales of Ensure surpassing $3 billion. This achievement helped deliver another year of strong performance in adult nutrition, with annual sales of adult nutrition products growing 9% last year. This strong performance is a continuation of a well-established trend; the five-year compound annual growth rate in adult nutrition is 9%, which reflects the impact of our well-known and respected brands, favorable demographic trends, and the significant investments we've made to expand manufacturing capacity to serve the growing global demand for our products. Moving to Diagnostics, where sales increased 6%, excluding COVID testing sales. Growth in the quarter was led by rapid diagnostics, where excluding COVID testing sales increased 16% in the quarter. This was driven by strong demand for our portfolio of respiratory disease tests used to help diagnose influenza, strep throat, and RSV. In Core Laboratory Diagnostics, growth of 4% was driven by continued strong demand for our market-leading immunoassay, clinical chemistry, hematology, and blood screening testing panels. Excluding the impact of challenging market dynamics in China, the combined growth in all other markets was double digits in the quarter. Turning to EPD, where sales increased 8.5% in the quarter. Growth was well balanced across markets and therapeutic areas that we participate in, including gastroenterology, women's health, CNS, and pain management. EPD also delivered broad-based growth across the markets we serve, including double-digit growth in several countries across Latin America, Southeast Asia, and the Middle East. By focusing on the therapies most needed in these faster-growing markets, we continue to sustain our long track record of delivering strong growth, which includes a five-year compound annual growth rate for EPD of 8%. And I'll wrap up with Medical Devices, where sales grew 14%. In Diabetes Care, sales of continuous glucose monitors were $1.8 billion in the quarter and grew 23%. For the full year 2024, sales of continuous glucose monitors were approximately $6.5 billion and grew 22%. This included growth of 27% in the U.S., where our market share on a revenue basis has increased by more than 10 percentage points over the last three years. In electrophysiology, growth of 9% was well balanced across the U.S. and international markets. As expected, growth in the quarter was impacted by a challenging comparison versus the prior year where we saw a sharp increase in demand for our EnSite cardiac mapping systems as customers prepared for the launch of PFA catheters. Excluding the impact of this prior year comparison dynamic, growth would have been double digits globally in the U.S. and internationally. In Structural Heart, growth of 23% was driven by strong performance across our market-leading portfolio of surgical valves, structural interventions, and transcatheter repair and replacement products. Structural Heart represents one of the most attractive areas in the field of medical technologies. It is an area that we have invested in heavily, and we're seeing those investments yield outstanding results. Our comprehensive portfolio of products drove an acceleration in sales growth in Structural Heart throughout the year. In Rhythm Management, growth of 7% was led by AVEIR, our innovative leadless pacemaker, and Assert, our newest implantable cardiac monitor, which we launched in the U.S. last year. With growth of 7% for the full year, our Rhythm Management business delivered another year of performance that far exceeded the market, and we expect that to continue this year. Last month, we announced that we completed the first-in-human implant of a new version of AVEIR specifically designed to deliver pacing to the left bundle branch area of the heart, activating the heart's natural conduction system. This highly innovative device, currently in development, was granted breakthrough designation by the FDA. In Heart Failure, growth of 9.5% was driven by our market-leading portfolio of heart-assist devices, which offer treatment for chronic and temporary conditions. In Vascular, growth of 7% was led by double-digit growth in vessel closure products and growth from Esprit, our below-the-knee resorbable stent. And lastly, in Neuromodulation, sales grew 8%, driven by strong demand in international markets for our Eterna rechargeable spinal cord stimulation device. So in summary, we delivered another quarter of strong growth, with sales growing 10% and earnings per share growing 13%. For the year, we achieved the upper end of the initial guidance ranges we provided for 2024. We made great progress expanding our gross margin profile, and we expect that progress to continue into 2025. The pipeline continues to provide a steady cadence of new growth opportunities, and we're well positioned to deliver another year of strong growth in 2025. 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 fourth quarter results. Sales increased 8.8% on an organic basis and increased 10.1% when excluding COVID testing sales. Foreign exchange had an unfavorable year-over-year impact of 1.4% on fourth quarter sales. During the quarter, we saw the U.S. dollar strengthen against most currencies, which resulted in an unfavorable impact on sales compared to exchange rates at the time of our earnings call in October. Regarding other aspects of the P&L, the adjusted gross margin ratio was 56.9% of sales, adjusted R&D was 6.3% of sales, and adjusted SG&A was 26.3% of sales in the fourth quarter. Lastly, our fourth quarter adjusted tax rate was 15%. Turning to our outlook for 2025, today, we issued guidance for full year adjusted earnings per share of $5.05 to $5.25, which reflects double-digit growth at the midpoint of the range and contemplates an adjusted earnings per share forecast of $1.05 to $1.09 for the first quarter. For the year, we forecast organic sales growth to be in the range of 7.5% to 8.5%. Please note that we are no longer providing separate guidance for the sales growth excluding COVID testing sales as COVID testing sales represent less than 2% of total company sales in 2024. Based on current rates, we would expect exchange to have an unfavorable impact of around 2.5% on full year reported sales, which includes an expected unfavorable impact of approximately 3.5% on our first quarter reported sales. We expect our full year 2025 adjusted gross margin profile to be around 57% of sales, which reflects an improvement of around 80 basis points versus the prior year. We forecast our full year 2025 adjusted operating margin profile to be in the range of 23.5% to 24% of sales, which reflects an improvement of 150 basis points versus the prior year at the midpoint of range. This improvement is driven by a combination of strong gross margin expansion and operating margin leverage. We forecast our adjusted tax rate to be in the range of 16% to 17%, which reflects an increase compared to last year related to the adoption of the Pillar 2 tax framework.

Thank you. At this time, we will conduct a question-and-answer session. And our first question will come from Robbie Marcus from JPMorgan. Your line is open.

Great. Thanks for taking the question and congrats on a nice quarter and guide. And maybe, Robert, I could start with the 2025 guide, once again guiding to high single-digit organic sales growth, healthy operating margin expansion, and nice to see 10% EPS growth back in the algorithm again. Maybe you could just speak to some of the key growth drivers and how we should think about the different business segments on the top line and some of the components of the operating margin expansion down the P&L? Thanks a lot.

Sure, Robbie. Yes, it's nice to see kind of the headline print now back to double-digit EPS growth. I think that's probably one of the things that you'll see now, Robbie, as we go into 2025. I mean, you've got a lot of growth drivers there. But I think one of the big things is that you don't have the COVID sales decline cloud that's kind of overshadowing all these real strong growth drivers that we got in the business. And you saw that in Q3 as we showed 13% EPS growth. So I think that's one big aspect. It's just not having those sales declines. I mean, we've got COVID sales in 2025, but it's, as Phil said in his comments, significantly less from our total revenue perspective. I think it starts with the top line always, Robbie, and the markets that we compete in, they remain attractive. We're seeing acceleration in several of them. I mean, we're a very diversified healthcare company so we get to benefit from all the different dynamics that are going on in healthcare, whether it's increased health and wellness focus from consumers, we get to benefit from that on our Nutrition business. Every treatment requires a diagnostic test; about 70% of them require diagnostic tests, so we're seeing continued growth over there. And then we've got two areas where we focus on treatments, whether it's pharmaceuticals or med tech. And so all of those markets, they're accelerating. And then within them, we've got strong product portfolios that are either keeping up with these very high-growth markets, or we're outperforming the market and taking shares. If you look at the contributions, we've got your current drivers, whether it's Libre, TriClip, Aveir, Navitor, Amulet, all of those products in the cardiovascular space. So the bases are loaded, I would call that. And then you've got a nice on-deck circle for the lineup of Abbott that are coming up right after that, whether it's biosimilars, volt, innovations in the Libre portfolio, some clinical trial readouts. So I think we feel very good about all of the businesses, and you saw all of the businesses improved their growth from Q3 to Q4. So I think it starts with the top line, and I think we're well positioned in them. To your question on the margin drivers, I'd say we've done a lot of work on gross margin expansion. We've talked about that committing to a 70-basis-point improvement in 2024. We achieved that. We believe that we can achieve another 80 basis points of improvement in 2025, and that's what's embedded in that guide is continuous improvement on the gross margin to the tune of 80 basis points will be driven by continued focus on gross margin improvement programs and then mix as some of the higher gross margin products continue to grow ahead of the company average, you get that mix effect. And then down the P&L, I think you've got an opportunity, as we've talked about in the past, to be able to leverage the business and obtain spending leverage across the business. And again, I think that was another challenge we had during COVID or as the COVID was coming down, we really only relied on one lever of margin expansion, which was gross margin equipment. I'd say now you've got two. We actually have two, which is our original formula, gross margin expansion and then spending leverage. So you put all that together, you've got about 16% actually underlying growth in the EPS coming from the top line, the gross margin improvement, and the spending leverage. And then we've got, obviously, some friction on FX. I think every company is going to face that as we've seen the strengthening dollar and increased tax rates, which also aren't a surprise. We've known about that. And so that brings us down to that 10%. So I kind of look at this and say, okay, what you've seen now for 2025 is the Abbott that we know, the Abbott identity that we built, which is high single-digit top line, double-digit bottom line, gross margin improvement, spending leverage and productivity, strong operating cash flow.

Great. Thank you very much.

Thank you. Our next question will come from Larry Biegelsen from Wells Fargo. Your line is open.

Good morning. Thanks for taking the question. So Robert, I guess you talked about it starts with the top line. You had another really strong year for CGM with over 20% constant currency growth of $6.5 billion in sales. So I'd love to hear you talk about your expectations for growth in 2025. The status of the Libre 3 supply issues and any color you have on the Lingo launch? Thank you.

Sure. So let me talk about Libre 3 supply. As we spoke about during the last call, Larry, there was a little bit of a mismatch between our manufacturing coming up online and the demand that we were seeing, especially here in the US. That caused a little bit of friction there, but as I said, we were in the process of getting our new manufacturing site up and running. I was there in November and saw the team, and that's going now at full force. So Libre 3 supply with two manufacturing sites up and running, and I think you'll start to see throughout the next one or two quarters a change here and a little bit on the NBRxs on the TRxs. I know you guys like to look at those quite often; those are an important metric to look at it, Larry, but they're not the only metric to see how the businesses are doing. I think you noticed our growth in the US was 24% in Q4. There are other factors that are not reflected in the data. You also saw how relying solely on that data in Q3 impacted us as competitors faced their own challenges. While it’s an important metric to consider, it’s not the only one, and I believe we've demonstrated that. The Libre 3 is performing well and is expected to improve further. Looking ahead to 2025, I see some compelling growth drivers for us. I'd say, first, as a base case, I still think there's under-penetration in the intensive insulin-using segment. I mean, if you look at the US, there's still 25% of that segment that are not on CGMs, and if you think about that internationally, it's more like 50%. So I still think as a base case to driving all this growth, there's all this opportunity in this segment; but I think there are three areas in 2025 that I believe accelerates that opportunity for us. One of them is obviously basal coverage. And we continue to see with the publication of more clinical evidence, you see more and more markets move towards expanding basal coverage, reimbursement coverage. Now we have a couple of markets where we're the only ones that do have that coverage, whether it's Japan or Canada. These are large markets. So these are great opportunities for us where we've got this head start, and we'll keep on driving that. So I think Basel is a big bucket of growth. I think the other area that I talked about as being an area of growth for us is more of a kind of share ability to take share, and that's through connectivity strategies with insulin delivery systems. We've been talking about all the things that we've been doing with regards to partnership with insulin pump companies. And I think you'll see throughout this year several announcements on connectivity in different geographies, and that gives us the opportunity to penetrate, albeit a smaller segment, but be able to penetrate that segment and take share. And I think the third area of growth for us of acceleration is just the whole OTC non-diabetes application with the launch of Lingo, continue to see very nice trends. We've launched it in a restricted number of U.S. cities, but I think now that we understand what it takes to drive adoption with this completely different consumer segment that we'll probably be expanding this and expanding this more nationally here in the U.S. and potentially looking at other areas internationally to bring this. So I think the Lingo launch is going very well. In several areas, I think it's surpassed some of my expectations, especially regarding reorder rates. And I think those continue, and I think that's going to be another leg of the stool relative to growth.

Thank you very much.

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

Hey, thanks for taking the question. I wanted to ask about EP growth, still strong high single digits in the quarter, and I think it was even faster than that, excluding the tough mapping comp. There's a lot of things moving around in that market right now. One competitor had a big setback in DSA, and your progress is moving forward with both. So just thinking about how you're looking at EP growth in 2025 as you bridge the PFA in 2026 and your ability to regain market share once both launches?

Sure. Yes, I mean, I think this was not a surprise for us, and it wasn't really driven by any kind of adoption of PFA regarding our Q4 growth rate. In fact, as I've said in previous calls, I think the net effect for us has actually been very positive. What we did have was an execution of that strategy, Travis, where we said we are going to bridge ourselves, and one of the ways to do that is through our mapping. And that's what really drove our success in 2024; we took advantage of our ability to offer the only truly open mapping system in Q4 of 2023. So that created that comp issue. It was double digits in Q4, 12% in the U.S., 12% internationally. So still seeing very good growth. And I think, again, I would say, these results, I think we outperformed a lot of the expectations that many of you had about our EP business. And I think the driver of that has been the team. The team in the field has just been spectacular, I think. I've been close to them last year, and I think what they did was really strong. So, I guess I answered your question in 2025, really looking at what we did in 2024. And I expect to continue to benefit in 2025 from the general increasing procedure trends. We've got opportunities to grow with some recently launched products, whether it's our GridX, our next-generation mapping catheter, our new Agilis Introducer Sheath; I mean that's a great opportunity for us also. So, yes, it's going to be a little bit more competitive. It's been pretty competitive in 2024. I expect that intensity to increase when it comes to the ablation catheters. But I'm confident that we can maintain a strong position in the mapping segment and with all the consumables that come with that. On top of that, our pipeline is very strong. We'll continue to engage KOLs and our customers. We've got an ongoing trial right now with a dual energy source catheter internationally and in the U.S. We have integration with ICE and new sheets to launch. The pipeline enables us to keep interacting with KOLs and users. We should anticipate bridging to PFA around 2025 internationally, rather than 2026. I'm feeling optimistic about this. And maybe you've got a tale of two halves, where the second half is going to grow faster than the first half as Volt comes on board. But I'd say, for the full year, high single-digits seems like a good place to start, and call that our base case. And then to the point that you made about competition and some of the dynamics that have occurred in the last couple of weeks, it's still a little bit too early to tell, but that could be an opportunity for us also. So, I feel good about the business, not only the pipeline, but more importantly, the team that we've got. They're doing an incredibly strong job.

Great. Thanks a lot.

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

Hi Robert. Thanks for taking my question and congrats on a strong finish to the year. I guess I had a two-part question, if you don't mind. Really strong operating margins, driven both by gross margins and operating leverage, but your gross margins are still below pre-pandemic levels. So, I'm curious, when you look at the margins, how sustainable are these trends, perhaps not at triple-digits, but should we be thinking about trend margin framework as gross margins normalize? And my second part is on balance sheet. I'm curious there's been some M&A activity picking up in MedTech. How you're thinking about devices versus diagnostics? I'm curious, any thoughts on that cancer screening, MRD, et cetera?

I'll let Phil talk to the gross margin and the sustainability of that margin improvement, and then I'll take your balance sheet question.

Yes. Thanks, Robert and Vijay here. On the gross margin front, I think we spoke to this in the last few calls and nothing here has really changed relative to an underlying focus of the business and of the organization, as Robert touched on here. I think the difference in recent years causing that erosion was the significant inflation in commodity prices, which has really resorted back to, I'd call it, normalized inflationary pressures that we're very much accustomed to managing through with our organizations and focus on gross margin expansion. And so what you saw in 2024 was exactly that, the recipe we're accustomed to and the commitment in 2025 to do much of the same. So from an expense standpoint, we expect this to continue, and it's not a matter of if, but when we get back to the legacy and historical gross margin profiles.

I appreciate your question about the balance sheet. I've always emphasized a balanced approach. I won’t provide a specific breakdown of allocations, but we do maintain this balance. Regarding your question about mergers and acquisitions, there has certainly been an increase in activity. There are promising opportunities available, and while I don't anticipate changes in the interest rate environment, the regulatory landscape may present new possibilities. I've said that we've got a strong organic pipeline. It allows us to be selective. It allows us to look at opportunities that make sense strategically, but also generate an attractive return. I talked about how ROIC is important for us also. So not just top line, but return on that capital. So we do take a position here of being stewards of that capital. So I'd say, yes, we're in great position. We do have some debt to pay down this year, which we will. I don't anticipate rates coming down to the point that we might want to look at refinancing that. So we'll pay off that debt. It's about $1.5 billion this year. But even with that, we're in a great position with our balance sheet to be able to leverage opportunities that we'll see; talked about them. There's opportunities in med-tech, there's opportunities in diagnostics, and we're in a great position, and it allows us to be selective.

Understood. Thanks guys.

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

Hi, good morning. Thanks for taking the questions. I echo Vijay's congrats on a strong finish to the year. Another margin question just because the operating margin guidance for 2025 was stronger than expected, I think you talked about a lot of the drivers, Robert and Phil, but just a continued positive mix shift from stronger macro device contributions and the strong top line growth. But I was hoping you may just help us think through just the margin expansion opportunities in EPD, Nutrition, and Diagnostics. And just with the outsized expansion in 2025, how should we be thinking about sustained open expansion in 2026 and beyond? And then should we be thinking about 50 to 100 basis points a year? I appreciate you taking the question.

Yeah. I'd like to get to that pre-pandemic gross margin. I mean, I know we talk a lot about this being behind where we were from a pre-pandemic. But our op margin profile, especially after our guidance for 2025 is actually ahead of that. So we've been able to achieve that through our spending and spending efficiencies. But I think that's the right range to have. I mean I think we've always had this notion. I mean, I talked about being able to offset FX and things like that and not provide any surprises. That's part of the algorithm there, which is we're just constantly having to address gross margin. It's not like this initiative either because of inflation or bits of tariffs or anything like that; it's just we're constantly working to improve gross margins. I'd say, on the nutrition side, those gross margins, given what we encountered over the last two years, came down. But if you look at them, they have been improving sequentially almost every quarter. We've got a ways to go to get back to where we were in 2022, Josh. That's a little bit more dependent on commodities and freight and distribution, things like that. But I think the teams have got a really good strategy here of kind of working on cost to serve and even, quite frankly, using some pricing where we felt we had to because of some of the increase in those commodities. So I think the Nutrition gross margin is definitely an opportunity that we've got over the next couple of years. The pharmaceutical teams have done an incredible job maintaining a gross margin despite significant foreign exchange challenges. They excel at offsetting these currency fluctuations. If you examine the margin profile in that business, it has actually increased by several hundred basis points over the past few years. They have achieved this improvement through their gross margin efforts as well. And I think the other element is just ensuring that we keep on driving the med tech business that have accretive gross margins quite frankly, across all of those different business units. And if we can continue to do that, then that's how you get to that model of maybe 50 to 100 basis points every single year. That's our target. We committed to 70, and we delivered on 70, we're now committing to 80 for 2025. And getting us closer to where we were pre-pandemic. So I feel good about what we're doing, the strategy we got in place, the discipline that we have as a management team to review these programs and dedicate time. They don't just happen. We got to make decisions. There's oversight. So I feel good about it.

Excellent. Thanks, again.

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

Thank you. Good morning, everybody. I was hoping, Robert, you could go into a little bit more detail on the Structural Heart business. As you kind of break down the pieces of that portfolio, you have a balance of drivers, some more legacy like MitraClip and some that are more emerging categories, like TriClip and the tricuspid repair segment. But maybe you could help us think about the evolution of that business, which did very nicely through 2024, and how we should think about that into 2025? And maybe I could just contextualize the broader outlook here, and I appreciate your comments about getting back to the Aveir of high single-digit top line and double-digit bottom line. But it looks like 2025 does carry some headwinds that may prove to be one-time in nature like VBP dynamics in China on the diagnostics side, the transient competition in EP.

Sure. I think it's interesting, like the sixth question comes on Structural Heart after we posted a 23% growth. So thank you, David. As I said in my opening comments, I think this is one of the most attractive areas in med tech. And it's one that we looked at several years ago and said, we're going to build truly a market-leading portfolio of products. And we're not going to just kind of rely on one platform to kind of drive growth, we're really going to assemble a full area here and look across the entire area. And even in surgical, I mean I think, I look at our Epic valve, the feedback I keep getting on the surgical side of it is just doing incredibly well and it's really a preferred go-to on the mitral side for surgical repair and replacement. But yeah. I think in the past, David, I think our Structural Heart portfolio was just viewed as MitraClip. And quite frankly, the sales would say, yeah, that's probably the case. But as we've been building out the portfolio, building on our stroke prevention with PFO approval, with Amulet approval and driving growth there, Amulet did very well in Q4 also grew 25%. We are gaining a strong presence in the aortic segment and establishing clinical credibility through both clinical trials and real-world product usage. We've received very positive feedback from the Navitor cases here in the US. We are investing significantly in our clinical trials to expand our indications. Recently, we announced the development of a balloon expandable TAVR valve, aiming for a comprehensive aortic portfolio. On the tricuspid side, we were one of the leaders there to say, hey, there's no real good transcatheter opportunity here to treat TR. And TriClip has done very well. It's done extremely well, quite frankly, throughout this year. I think the team has done an incredible job getting approved behind the competitor. I would say right now, our data says that the ratio of repair and replace is about 2:1, and we're leveraging all of that built-in kind of infrastructure and scale that we already built with MitraClip. So what you see is a Structural Heart portfolio, $2.5 billion growing, let's call it, mid-teens because it’s much more diversified and, quite frankly, very competitive products in these high-growth areas. So I think that's going to continue, and we're committed to making these investments. We've got new versions of Amulet launch. We just got an approval for an updated version of TriClip to ease even more of the implant. You're going to see clinical trials read out in this area for label expansion indications in TAVR and in LAA. So this is an area where I believe the current growth rate is a result of our investments and the excellent execution from the team. You asked about the growth rate and...

Yes, I was trying to speak a second there was just to contextualize the 25% growth rate given some onetime-ish headwinds like VBP in China Diagnostics and the dynamics in EP being potentially kind of transient as well?

Yeah. I mean, listen, every quarter, every year, there's always going to be some headwind. I want to do is here is assemble more tailwinds than headwinds, right? But yeah, I mean, you mentioned one, which is a little bit of a headwind for us in our diagnostic business regarding VBP. That's going to be with us in 2025 as they're rolling out new panels of testing that's going to go through that. But outside of that, I'd say, the diagnostics business is doing very well. Q4 growth rates in most areas were actually higher than the full year growth rate in those same areas, US, Latin America, Europe, even Japan was faster in Q4. So yes, we do have a challenge, but most companies are going to do it. And you know what, we've gone through these, David. Every company goes through a VBP, and what we're trying to do is, okay, we're not going to define the company by having this one kind of headwind. We've got a lot more tailwinds to leverage. We still have to deal with it. We're still managing it. It's still an important part of the business. But the company is more than just VBP in diagnostics and one important market, but just one market. So I think the growth rate is very robust. I mean, 8% at the midpoint on a base of $40-plus billion, I think is pretty strong and pretty good.

Perfect. Thanks for taking the questions.

Thank you. And our next question will come from Joanne Wuensch from Citi. Your line is open.

Good morning and thank you for taking the question and nice quarter. I'm curious if you could just sort of step back and talk about the overall health of the MedTech market. I feel like I'm constantly answering questions on things such as volume and price. And looking at you delivering mid-teens revenue growth, and I think you're seeing something that maybe not everybody is seeing, so I'd love to get your view on that. Thank you.

Sure. The way our portfolio is structured gives us a broad perspective on the entire health care system. If you're seeking insights on MedTech and its growth, it’s important to continue observing the reports from various companies. And what they're reporting is ultimately what we're seeing in the market, which is, it's not a pre-COVID pent-up demand. You are seeing a greater focus from whether consumers or the technologies that are being developed that are attracting more people into these procedures. So I think what we're seeing here is continued utilization growth really driven by whether it's demographics, combined with the innovation. I mean, what the industry is doing in terms of the innovation that we're bringing to the market, it's pretty spectacular and the procedures are getting faster, they're getting less invasive, and that's attracting more people to look at, select these procedures as a viable first-line option versus guided medical therapy. So I think that's going to continue as long as we continue to see this innovation where we are obviously positioning ourselves pretty strongly in this, and you've seen sequential improvement in the growth rate across quite frankly, a lot of our businesses in MedTech. So I think the utilization is definitely increasing. I think there's maybe some questions, okay, what's going to happen with pricing? We've historically seen some price erosion in the past. I'd say, over the last couple of years, it's actually been pretty stable. So I don't know how that's going to play out. We've got a scenario here where we believe that with our portfolio, we'll see some pretty stable pricing. But I think utilization, combined with stable pricing is what's driving this MedTech growth. And we're seeing it in diagnostics, too. A lot of our diagnostic business is actual hospital-based diagnostics. So, we're seeing those diagnostic tests and those routine diagnostics tests continue to increase, high single, double-digit, low double-digit growth rates in terms of utilization.

Thank you so much.

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

Hey good morning guys. Thanks so much for taking the question and congrats on a really good quarter, strong end to the year. Robert, we've talked in the past, I mean, obviously, we talked a lot about MedTech in the high-growth areas, but some areas where you've excelled are the legacy sort of slower growth businesses, I'm obviously thinking CRM being one of those mid- to high single-digit growth. Can you talk about that you find in CRM other legacy businesses? I'm thinking like heart failure, peripheral, and maybe how you're thinking about elevating those growth profiles in 2025, but then also longer term? Thanks so much for taking the question.

Yes. So, one of our strategies that we looked at a couple of years ago, Danielle, was if you looked at our MedTech business, it was growing like 8%, 9%. And that was a combination of probably high-growth areas like EP, Structural Heart, Diabetes, even Heart Failure. And 40% of the portfolio was relatively flat, and that was mostly our Vascular business and our CRM business. And the way we looked at it is to get our MedTech to be best-in-class, to be able to grow 12%, 13%, 14%, we need to continue the strong growth rate of Structural Heart, EP, Diabetes, et cetera. But we had to find a way to accelerate the growth rate of our Vascular and CRM businesses. And we said, if we can get them, these are historically been flat growth markets. If we can get them to grow 5% the way that would then work out is that we'd be able to elevate our MedTech portfolio to the mid-teens. So, that's what we've been doing over the last couple of years, and the team has been executing on that. In the Vascular sector, we have utilized both organic and inorganic strategies to enhance our involvement in faster-growing areas, particularly on the peripheral side. You may have noticed this improvement. This quarter has shown positive growth, and our goal for the Vascular business was approximately 5%. We have achieved this by developing stronger pipelines and portfolios focused on that peripheral market. You are starting to see that now come to fruition. On the CRM side, our main strategy has been to grow organically and launch a comprehensive approach to become leaders in leadless technology. We introduced a single chamber a few years ago and followed up with a dual chamber last year, and we are also going to expand into conduct and pacing leadless solutions. And I think that you've seen that over the last two years, our CRM business has grown 7%. And I think we can continue to extend that with the strategy that we're doing, which is to really lead in this area. I actually think that Aveir is probably the most underappreciated opportunities that we have in our portfolio. You're asking this question towards the end of the call, but what you are observing is that these businesses are focused, innovative, and executing well, which is leading to progress in their strategy to elevate these flat businesses to at least mid-single-digit growth.

Thank you.

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

Thank you. And our last question will come from Matt Miksic from Barclays. Your line is open.

Hey. Thanks for squeezing me in. Just maybe a follow-up here, given the tech guidance you gave for this year and some of the dynamics in US and overseas or tax policy, it'd be great to get your perspective on maybe the direction of where those things are going. And how we should think about them for having? Thanks so much.

Yeah. Thanks, Matt. There's a lot of narrative at the moment going on. But to your point and to the guide that we referenced in our opening comments here, what we've reflected is all current tax laws and guidance and geographic mix of where our business growth is coming from, which is about a 150-basis-point increase in the midpoint of this guide. That increase in the guide is driven by the increased adoption of the rollout here of Pillar 2 as is currently enacted in countries. And so that's what we reflect. We continue to be a good taxpayer, compliant taxpayer, and we'll see how more of this narrative unfolds here. But currently, we're running the operations and reflecting what's known and as Robert highlighted, absorbing still within the way we run the business.

Let me add to that, Matt. I think this topic will come up frequently. Looking at the bigger picture, corporate tax rates often become highly politicized, especially during election years, but it's not really a political issue. In business, it's simply an expense. When one expense rises, you have to manage it, which means other expenses need to decrease or not increase at the same pace they were previously. And I think what you'll find sometimes, you get a small handful of companies that maybe had a really low tax rate and then that viewpoint then gets unfairly applied to every large company, and then you get these predictable narratives of companies have got to pay their fair share, et cetera. The reality is, most companies pay their fair share and then some. I mean, I could talk about Abbott. Our cash taxes are over 20%, and that's one thing that people never talk about is we use these GAAP rates. But what really matters is cash taxes. That's the money that's going to be paid. But more importantly, US companies, companies like Abbott, we play a key role in making the US economy so successful. We're conducting a significant portion of the R&D in the US. We invest billions of dollars in capital projects, which then drive this drop growth. Our CapEx spend has increased over 60% over the last couple of years. We increased our workforce by 20%. Increasing the workforce means investing hundreds of millions of dollars in employee health care and benefits. This Pillar 2 legislation that was adopted adds an additional expense of $200 million. That's all it is—just $200 million more in expenses that won't be used for investing in other areas. And what's even more challenging is of those $200 million, two-thirds of it is actually going to be paid taxes to overseas countries. So that's not really a good policy for the US. And so we're absorbing this. We're managing it. And I think as Phil said, there are still some new policies or new issues that we have to kind of work on. But I think the overall goal here has got to be to ensure the competitiveness of US companies and US multinationals. And I'm hoping we can get to that during the next 12 months or so. Let me just kind of close then on the call. I think we had a really strong finish to 2024. We exited our Q4 organic sales growth was over 10% and top line, 13% EPS, as I said, finished at the higher end of our range, expanded our gross margin, delivered what we said we were going to do. The pipeline continues to be highly, highly attractive, steady cadence of great new growth opportunities. And I think, to Vijay's question, we've got a balance sheet that's going to provide us a lot of strategic flexibility. So I think we're really well positioned to 2025. So with that, I want to thank you for joining us today.

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 a.m. Central Time today on Abbott's Investor Relations website at abbottinvestor.com. Thank you all 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.