Abbott to Spin Off $8.5 Billion Nutrition Business by End of 2027 as Shares Slide on Lowered Outlook

Abbott Laboratories said on Oct. 21, 2026 that it intends to separate its global Nutrition business, the unit behind Similac, Ensure, PediaSure, Pedialyte and Glucerna, into an independent, publicly traded company through a tax-free distribution of shares to Abbott shareholders, according to the company's press release distributed via PR Newswire. Abbott expects to complete the transaction by the end of 2027. The announcement landed the same day Abbott reported third-quarter results and trimmed its 2026 growth outlook, a combination that sent shares lower in premarket trading, per Seeking Alpha and The Edge Malaysia, which cited Bloomberg reporting.

How the Separation Is Structured

Per Abbott's release, the deal is designed as a tax-free spin-off rather than a sale or IPO: Abbott shareholders will end up owning shares in both Abbott and the new independent Nutrition company once the separation closes. The transaction is intended to qualify as tax-free for U.S. federal income tax purposes. Completion is contingent on customary conditions, including regulatory approvals, the effectiveness of a Form 10 registration statement, and final sign-off from Abbott's board, and the company cautioned there is no assurance as to timing or whether the separation will ultimately be completed. Goldman Sachs is serving as financial advisor and Wachtell, Lipton, Rosen & Katz as legal counsel, Abbott said.

Abbott said the planned separation will not affect its 2026 guidance or the 2027 guidance it plans to issue in January, and that the Nutrition business will keep operating inside Abbott throughout the process. The company also flagged that it expects to incur one-time charges tied to the transaction in the periods before separation, with the size to be disclosed later.

Two Very Different Companies

The numbers Abbott disclosed illustrate how lopsided the split will be. The new Nutrition company will carry roughly $8.5 billion in annual sales, about 16,000 employees and 14 manufacturing sites, built around category-leading brands: Ensure, which Abbott describes as the world's No. 1 adult nutrition supplement drink; PediaSure, the world's No. 1 pediatric nutrition supplement; Glucerna, the world's No. 1 diabetes management nutrition brand; and Similac, the No. 1 infant formula brand in the U.S.

The remaining Abbott will be roughly five times larger by revenue, with sales of approximately $42 billion and about 106,000 employees, anchored by market-leading positions in cardiovascular and neuromodulation devices, biowearables, laboratory, point-of-care and cancer diagnostics, and established medicines, according to the release. On those two disclosed figures, Nutrition's $8.5 billion in sales sits $33.5 billion, or about 79.8%, below the post-separation Abbott's $42 billion (our calculation: (8.5 - 42) / 42 x 100 = -79.8%). Interpretation: the spin-off is sizable in absolute terms, but once standing alone it will be a far smaller company than the Abbott shareholders own today.

Abbott framed the logic in terms of fit rather than performance: the company said the post-separation Abbott will have "accelerated sales growth and an expanded margin profile," and that the two businesses have different investment identities, growth profiles and innovation cycles that each benefit from separate capital allocation. Chairman and CEO Robert B. Ford said the separation "will benefit both companies, setting each one up for maximum success in its respective market," according to the company's release. Abbott currently reports results across four segments, Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Medical Devices, and employs about 122,000 people in more than 160 countries, per Abbott's statement and Yahoo Finance's company profile.

Q3 Results and a Trimmed Outlook

The spin-off news arrived alongside Abbott's third-quarter 2026 report. Seeking Alpha reported that revenue reached $13.0 billion, up roughly 14.5% year over year, and that the result topped analyst estimates. Despite that beat, Seeking Alpha said Abbott lowered its full-year growth outlook alongside the Q3 release. Neither the prior nor the revised guidance figures, nor the segments behind the reduction, were detailed in that reporting.

Shares Slip Despite the Earnings Beat

Abbott shares fell about 4% in premarket trading on the announcement day even with the revenue beat, according to The Edge Malaysia's citation of Bloomberg, and TradingView's republication of Seeking Alpha coverage similarly noted Abbott traded lower despite the better-than-expected Q3 results. The Edge, again citing Bloomberg, also reported that Abbott shares had fallen more than 18% since the start of the year through the prior session's close — 14 percentage points wider than the single-day premarket move (our calculation: 4 - 18 = -14 percentage points). Interpretation: the stock was already under pressure for months before the spin-off announcement, though the cited reporting does not attribute that year-to-date decline to a single cause.

Litigation and Industry Headwinds Behind the Scenes

Bloomberg's reporting, as relayed by The Edge Malaysia, placed the spin-off in the context of "a series of missteps" that have weighed on Abbott's broader performance, including 2022 recalls that triggered a nationwide infant-formula shortage. The same report said Abbott agreed last month to pay $385 million to settle U.S. allegations over poor manufacturing practices at two facilities, one of which was tied to an investigation of a contaminated powder infant-formula plant, and agreed in August to pay $670 million to settle lawsuits alleging the company hid the risk that its formula for premature babies can cause a deadly bowel disease. Morningstar's coverage likewise noted Abbott "has been involved in years of litigation over its management of a baby-formula facility where deadly bacteria was suspected of causing infant deaths," with several multimillion-dollar settlements agreed along the way.

The Edge Malaysia's report also noted that the nutrition industry broadly has proven difficult to navigate amid costly recalls and mounting litigation, and that Abbott is not alone in rethinking its exposure: rival Reckitt Benckiser previously sought to shed its Mead Johnson infant-formula business. The same report said Abbott lowered prices on some nutrition products at the end of last year to attract price-conscious consumers, after previously raising them to cover higher manufacturing costs.

Dividend Policy Unaffected, Abbott Says

Abbott said it expects the combined dividend paid by Abbott and the new Nutrition company to equal Abbott's dividend at the time of separation, suggesting shareholders would not see a reduction in total payout purely as a function of the split, though the mechanics of how that dividend gets divided between the two companies were not detailed in the release. Abbott said it would discuss the transaction further on its third-quarter earnings conference call the morning of the announcement.

Bottom Line

Abbott is pursuing a tax-free spin-off, not a sale, that would hand shareholders stock in both a slimmed-down, roughly $42 billion diagnostics-and-devices company and a standalone $8.5 billion nutrition business built around household brands like Similac and Ensure. The plan surfaced the same day Abbott beat Q3 revenue estimates yet lowered its full-year growth outlook, a mix that preceded a premarket share decline, per Seeking Alpha and Bloomberg via The Edge Malaysia. Bloomberg's and Morningstar's accounts set the move against years of recalls and litigation tied to the nutrition unit, while Abbott has said the separation — expected to close by the end of 2027 subject to regulatory and board approvals — will not change its 2026 or upcoming 2027 guidance, and that it expects the combined dividend from the two companies to match Abbott's dividend at the time of separation. As with any multi-year corporate separation, the final structure, charges and timing remain subject to change before completion.