Abbott Spins Out Nutrition Business

Abbott plans to separate its nutrition division to better focus on growing demand for functional nutrition products like Ensure and Pedialyte.

Abbott plans to spin out its nutrition business into an independent, publicly traded company. The unit includes brands like Ensure, Similac and Pedialyte. The nutrition business has annual sales of approximately $8.5 billion. In the third quarter, the division brought in revenue of $2.26 billion, which was year-over-year growth of about 5%. The nutrition division has faced lawsuits and a federal investigation over a 2022 recall of powdered infant formula due to potential contamination. In September, Abbott announced a $385 million settlement with the Department of Justice. The company also agreed to pay about $670 million in August to resolve a lawsuit involving specialty formulas for preterm infants. CEO Robert Ford said the move lets the nutrition unit capitalize on growing demand for healthy nutrition. He stated the remaining company can focus on higher-growth markets in medical devices, diagnostics and established medicines. Analysts noted that the nutrition business often weighed on total company sales growth and carried lower margins. They added that liabilities from infant formula litigation remained an overhang for the firm. Abbott expects to finish the spin off at the end of 2027, subject to regulatory approval. Current Abbott stockholders will own shares in both the original company and the new business when the deal is complete.

Read source: Food Dive