v3.26.1
Financial Instruments, Derivatives and Fair Value Measures
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments, Derivatives and Fair Value Measures
Note 11 — Financial Instruments, Derivatives and Fair Value Measures

Certain Abbott foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates, primarily for anticipated intercompany purchases by those subsidiaries whose functional currencies are not the U.S. dollar. These contracts, with gross notional amounts totaling $7.9 billion at June 30, 2026, and $7.4 billion at December 31, 2025, are designated as cash flow hedges of the variability of the cash flows due to changes in foreign exchange rates and are recorded at fair value. Accumulated gains and losses as of June 30, 2026, will be included in Cost of products sold at the time the products are sold, generally through the next twelve to eighteen months.

Abbott enters into foreign currency forward exchange contracts to manage currency exposures for foreign currency denominated third-party trade payables and receivables, and for intercompany loans and trade accounts payable where the receivable or payable is denominated in a currency other than the functional currency of the entity. For intercompany loans, the contracts require Abbott to sell or buy foreign currencies, primarily European currencies, in exchange for primarily U.S. dollars and other European currencies. For intercompany and trade payables and receivables, the currency exposures are primarily the U.S. dollar and European currencies. At June 30, 2026, and December 31, 2025, Abbott held gross notional amounts of $13.6 billion and $13.1 billion, respectively, of such foreign currency forward exchange contracts.

Abbott has designated a yen-denominated, 5-year term loan of $568 million and $589 million as of June 30, 2026, and December 31, 2025, respectively, as a hedge of the net investment in certain foreign subsidiaries. The change in the value of the debt, which is due to changes in foreign exchange rates, is recorded in Accumulated other comprehensive income (loss), net of tax.

Abbott is a party to interest rate hedge contracts to manage its exposure to changes in the fair value of fixed-rate debt. These contracts are designated as fair value hedges of the variability of the fair value of fixed-rate debt due to changes in the long-term benchmark interest rates. The effect of the hedge is to change a fixed-rate interest obligation to a variable rate for that portion of the debt. Abbott records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount. At June 30, 2026, and December 31, 2025, Abbott had interest rate hedge contracts with a notional amount totaling $4.2 billion and $1.2 billion, respectively. The increase from December 31, 2025, was due to additional interest rate hedge contracts associated with fixed-rate debt issued as part of the Exact Sciences acquisition.
The following table summarizes the amounts and location of certain derivative and non-derivative financial instruments as of June 30, 2026, and December 31, 2025:

Fair Value - AssetsFair Value - Liabilities
(in millions)June 30, 2026December 31, 2025Balance Sheet CaptionJune 30, 2026December 31, 2025Balance Sheet Caption
Interest rate swaps designated as fair value hedges:
Non-current$— $— Deferred income taxes and other assets$100 $— Post-employment obligations, deferred income taxes, and other long-term liabilities
Current— — Prepaid expenses and other receivables12 19 Other accrued liabilities
Foreign currency forward exchange contracts:
Hedging instruments152 57 Prepaid expenses and other receivables109 231 Other accrued liabilities
Others not designated as hedges90 51 Prepaid expenses and other receivables89 66 Other accrued liabilities
Debt designated as a hedge of net investment in a foreign subsidiary— — n/a568 589 Long-term debt
$242 $108 $878 $905 
The following table summarizes the activity for foreign currency forward exchange contracts designated as cash flow hedges and certain other derivative financial instruments, as well as the amounts and location of income (expense) and gain (loss) reclassified into income:

Gain (loss) Recognized in Other Comprehensive Income (loss)
Income (expense) and Gain (loss) Reclassified into Income
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
(in millions)20262025202620252026202520262025Income Statement Caption
Foreign currency forward exchange contracts designated as cash flow hedges$(19)$(209)$39 $(303)$(67)$48 $(137)$87 Cost of products sold
Debt designated as a hedge of net investment in a foreign subsidiary9 (23)21 (52)— — — — n/a
Interest rate swaps designated as fair value hedgesn/an/an/an/a(23)14 (93)17 Interest expense

Gains of $15 million and $1 million were recognized in the three months ended June 30, 2026, and 2025, respectively, related to foreign currency forward exchange contracts not designated as a hedge. Gains of $60 million and $35 million were recognized in the six months ended June 30, 2026, and 2025, respectively, related to foreign currency forward exchange contracts not designated as a hedge. These amounts are reported in the Condensed Consolidated Statement of Earnings on the Net foreign exchange (gain) loss line.

The carrying values and fair values of certain financial instruments as of June 30, 2026, and December 31, 2025, are shown in the following table. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from non-performance by these counterparties.

June 30, 2026December 31, 2025
(in millions)
Carrying Value
Fair Value
Carrying Value
Fair Value
Long-term Investment Securities:
Equity securities$747 $747 $597 $597 
Other364 364 321 321 
Total Long-term Debt(32,608)(31,753)(12,929)(12,772)
Foreign Currency Forward Exchange Contracts:   
Receivable position242 242 108 108 
(Payable) position(198)(198)(297)(297)
Interest Rate Hedge Contracts:    
Receivable position— — — — 
(Payable) position(112)(112)(19)(19)

The fair value of the debt was determined based on significant other observable inputs, including current interest rates.
The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis in the balance sheet:

Basis of Fair Value Measurement
(in millions)
Outstanding Balances
Quoted Prices in Active Markets
Significant Other Observable Inputs
Significant Unobservable Inputs
June 30, 2026:
Equity securities$348 $348 $— $— 
Foreign currency forward exchange contracts242 — 242 — 
Total Assets$590 $348 $242 $— 
Fair value of hedged long-term debt$4,041 $— $4,041 $— 
Interest rate swap derivative financial instruments112 — 112 — 
Foreign currency forward exchange contracts198 — 198 — 
Contingent consideration263 — — 263 
Total Liabilities$4,614 $— $4,351 $263 
December 31, 2025:
Equity securities$342 $342 $— $— 
Foreign currency forward exchange contracts108 — 108 — 
Total Assets$450 $342 $108 $— 
Fair value of hedged long-term debt$1,133 $— $1,133 $— 
Interest rate swap derivative financial instruments19 — 19 — 
Foreign currency forward exchange contracts297 — 297 — 
Contingent consideration1 — — 1 
Total Liabilities$1,450 $— $1,449 $1 

The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs. The fair value of contingent consideration is determined using valuation techniques that incorporate significant unobservable inputs and management estimates regarding the probability and timing of future payments. The increase in the amount of contingent consideration from December 31, 2025, reflects contingent consideration assumed with the acquisition of Exact Sciences.