Abbott Laboratories announced plans to spin off its nutrition business into an independent company as part of a strategic restructuring following several years of challenges related to its infant formula products. The decision was revealed during an earnings call on Wednesday and aims to allow both Abbott and the new entity to focus more effectively on their distinct markets.
The newly formed nutrition company will manage brands such as Similac, PediaSure, Pedialyte, Glucerna, and Ensure. It is expected to be headquartered in the Chicago area, where Abbott is currently based, with approximately $8.5 billion in annual sales, 16,000 employees, and 14 manufacturing sites. Abbott anticipates completing the separation by the end of 2027, subject to regulatory approvals and other customary conditions. Following the spin-off, Abbott’s remaining business is projected to generate about $42 billion in annual sales.
Robert Ford, Abbott’s chairman and CEO, described the nutrition sector as evolving in response to shifting consumer preferences and wellness trends. He indicated that the standalone structure would enable the nutrition business to innovate and invest more rapidly in sales and marketing initiatives than it could as part of the larger company.
Abbott’s nutrition division showed a 4.5% decline in U.S. sales during the first nine months of 2026 compared to the same period the previous year, making it the only Abbott segment to report a decrease in revenue in that timeframe.
The announcement comes amid ongoing legal and regulatory issues tied to Abbott’s infant formulas. In August, the company agreed to a $670 million settlement intended to resolve thousands of claims alleging that its formula for prematurely born infants caused necrotizing enterocolitis (NEC), a severe intestinal condition. This settlement followed an earlier court ruling that upheld a $495 million judgment against Abbott.
Despite the settlement, Abbott continues to face roughly 1,700 lawsuits nationwide connected to NEC claims. Ford indicated that the pending litigation does not need to be fully resolved before the spin-off is finalized and said both Abbott and the new nutrition company will remain financially equipped to address ongoing legal matters. He also noted that further details on how liabilities will be allocated between the two companies would be provided as the separation progresses.
Separately, last month Abbott agreed to pay nearly $385 million to settle a federal investigation and lawsuits brought by several states concerning the safety of its powdered infant formulas. The formulas were subject to a recall in 2022 after reports of illnesses and fatalities linked to Cronobacter sakazakii and Salmonella Newport infections. Abbott has maintained that no unopened distributed product tested positive for these pathogens, and while the U.S. Centers for Disease Control and Prevention found no definitive connection to Abbott’s Sturgis, Michigan, manufacturing plant, the U.S. Food and Drug Administration identified regulatory issues at the facility.
Financially, the new nutrition company plans to raise debt as part of the separation process, with a portion of the proceeds distributed to Abbott, according to Abbott’s Chief Financial Officer Phil Boudreau. Both companies are expected to continue paying dividends to shareholders.
Industry analysts regard the spin-off as an anticipated move, given the nutrition business’s operational challenges and its distinct profile compared to other Abbott divisions. Jayson Bedford of Raymond James suggested the separation could support improved revenue growth for Abbott.
This will not be Abbott’s first major business split; the company separated its pharmaceutical operations in 2013 to create AbbVie, a standalone entity based in North Chicago.