Abbott Laboratories plans to spin off its nutrition business into a separate company — a move that follows years of tumult over its infant formulas.
The new business will sell Abbott products including Similac, PediaSure, Pedialyte, Glucerna and Ensure. The north suburban-based company also makes medical tests, medical devices and generic pharmaceuticals.
The headquarters of the new nutrition company will remain in the Chicago area, an Abbott spokesperson said. The new company is expected to have $8.5 billion in annual sales, 16,000 employees and 14 manufacturing sites, according to Abbott.
Abbott plans to separate the nutrition business by distributing shares of the new company to Abbott shareholders. Abbott is expected to still have sales of $42 billion following the spin off. Abbott expects to complete the separation by the end of 2027, pending regulatory and other approvals.
Robert Ford, chairman and CEO of Abbott, said during an earnings call Wednesday morning that the separation will benefit both companies. He said the nutrition market has evolved over time, and is now shaped by changing consumer preferences and wellness trends. The nutrition business will need to evolve and invest in sales and marketing, and, Abbott decided, “they’d probably be able to do it faster and more efficiently and effectively as an independent company,” Ford said.
For its overall nutrition business, Abbott saw a 4.5% drop in sales in the U.S. during the first nine months of 2026 compared to the first nine months of 2025, according to its quarterly filing released Wednesday. It was the only one of Abbott’s business areas to see a decrease in sales during that period.
The announcement Wednesday also follows a challenging few years related to Abbott’s infant formulas.
In August, Abbott agreed to pay $670 million to settle a high-profile lawsuit and claims made on behalf of thousands of others related to allegations that its formula for babies born prematurely causes a dangerous intestinal disease.
That settlement came after an appeals court upheld a $495 million judgment against Abbott in the high-profile case earlier this year. Abbott continues to face about 1,700 lawsuits across the country over whether its formula for preterm infants causes necrotizing enterocolitis (NEC), in which tissue lining the intestine becomes inflamed and dies.
Ford said Wednesday morning the outstanding litigation does not have to be fully resolved in order to complete the spinoff. When an analyst asked during the call if the liability would remain with Abbott, Ford responded that he would “provide more details of that as we progress.” But he said both Abbott and the new company are going to be “well-capitalized to continue to defend the legal positions here.”
Separately, last month, Abbott said it would pay almost $385 million
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to resolve a federal investigation and lawsuit, as well as lawsuits filed by states, related to allegations over the safety of its powdered infant formulas.Abbott recalled those formulas in 2022 after reports of illnesses and deaths among babies who had consumed them, due to Cronobacter sakazakii and Salmonella Newport infections. It was a recall that contributed to parents across the country struggling to find formula for their infants for a time.
Abbott has said that no unopened, distributed Abbott infant formulas ever tested positive for Cronobacter sakazakii or Salmonella Newport. The U.S. Centers for Disease Control and Prevention has previously said it did not identify a definitive link between Cronobacter cases and the Sturgis, Michigan, facility where they were manufactured, though inspections by the U.S. Food and Drug Administration found problems at the plant.
As part of the process of separating the two companies, the new company will raise debt, with some of those proceeds distributed to Abbott, said Phil Boudreau, Abbott executive vice president for finance and chief financial officer, during the call. Both companies are expected to continue to pay dividends, he said.
The decision to separate nutrition into its own company should not come as a surprise, given the nutrition business has faced “operational challenges” and that it “differs from the rest of the business,” said Jayson Bedford with Raymond James, in a note to investors Wednesday.
Bedford said the spinoff should help Abbott’s revenue growth.
This isn’t the first time Abbott has spun off a major chunk of its business. In 2013, Abbott spun off its its pharmaceutical business, which became AbbVie, based in North Chicago.