AI-generated analysis, not investment advice. The articles are written by AI, edited, and checked against company filings — but the judgements are opinions and the figures go stale. How this is made · Terms

⚠ The Infant Formula LawsuitsModerate threat

Abbott Laboratories (ABT) — threat to the moat

Abbott paid about $670 million to settle one NEC verdict and 2,000 claims, and about 1,700 lawsuits for 12,700 infants remain with no reserve recorded.

Abbott's largest legal exposure is in its oldest kind of product. Families of premature babies have sued, alleging that preterm infant formula caused necrotizing enterocolitis. There were 1,760 such lawsuits pending at 31 January 20261. In July 2024 a St. Louis jury awarded $495 million in the Gill case, and Abbott's appeal was denied2.

NEC lawsuits pending against Abbott (count)1,76031 Jan 2026about 1,700Aug 2026, after settlingAbbott Form 10-K FY2025 and release on NEC settlements, August 2026
A billion dollars of formula settlements in 2026.

In August 2026 Abbott chose to settle. It agreed to resolve Gill and claims for about 2,000 other infants for about $670 million, rather than pay about $600 million on the Gill judgment and interest alone3. Roughly 1,700 lawsuits remain, on behalf of about 12,700 infants4.

Abbott has won as well as lost. It won all three federal bellwether trials, and the Seventh Circuit affirmed one of those wins in July 20265. It says the agreements are "not in any way an admission of liability"6, and the 10-Q said no reserves had been recorded for the NEC claims7. Abbott calls the litigation something whose resolution "could be material" to its financial position8.

The formula business carries other bills too. In September 2026 Abbott agreed to pay $384,999,040 to settle False Claims Act allegations over formula made at Sturgis and Casa Grande9, and recorded a $385 million legal reserve in the second quarter10.

The defense has had real wins. In an October 2024 Missouri trial involving Abbott, another formula maker and the treating hospital, the jury returned "a unanimous verdict for Abbott and its co-defendants"11, though the court granted a new trial in March 202512. Shareholders also sued the directors over the formula problems, and that derivative case was settled with governance reforms, with a hearing set for 4 June 202613.

The litigation also reaches Abbott's relationship with regulators. The 10-K notes requests from the Federal Trade Commission about bids for WIC formula contracts and multiple civil lawsuits over the manufacturing of powdered infant formula14. Each is small alone; together they keep the formula business in court for years.

The exposure stays open until the count falls. One more verdict above $100 million upheld on appeal, or more than 1,700 suits still pending at the end of 2026, and the August settlement bought time, not an end.

The number that tests this threat
Reported
NEC lawsuits pending
About 1,700 (August 2026), from 1,760 at 31 January 2026

The size of the open exposure; a rising count after the settlements would mean they did not deter new claims.

Source: Abbott release, NEC settlements ↗
References
  1. ReportedThere were 1,760 such lawsuits pending at 31 January 2026.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1A risk factors, competition, regulation and legal proceedings. — FY2025 · publ. 20 February 2026 · source ↗
  2. ReportedLouis jury awarded $495 million in the Gill case, and Abbott's appeal was denied.
    Abbott Laboratories release of 20 August 2026, Form 8-K exhibit 99.1 - agreements to resolve the Gill case and NEC claims on behalf of about 2,000 other infants for about $670 million; the $495 million Gill verdict; three federal MDL bellwether wins; about 1,700 lawsuits remaining on behalf of about 12,700 infants. — August 2026 · publ. 20 August 2026 · source ↗
  3. ReportedIt agreed to resolve Gill and claims for about 2,000 other infants for about $670 million, rather than pay about $600 million on the Gill judgment and interest alone.
    Abbott Laboratories release of 20 August 2026, Form 8-K exhibit 99.1 - agreements to resolve the Gill case and NEC claims on behalf of about 2,000 other infants for about $670 million; the $495 million Gill verdict; three federal MDL bellwether wins; about 1,700 lawsuits remaining on behalf of about 12,700 infants. — August 2026 · publ. 20 August 2026 · source ↗
  4. ReportedRoughly 1,700 lawsuits remain, on behalf of about 12,700 infants.
    Abbott Laboratories release of 20 August 2026, Form 8-K exhibit 99.1 - agreements to resolve the Gill case and NEC claims on behalf of about 2,000 other infants for about $670 million; the $495 million Gill verdict; three federal MDL bellwether wins; about 1,700 lawsuits remaining on behalf of about 12,700 infants. — August 2026 · publ. 20 August 2026 · source ↗
  5. ReportedIt won all three federal bellwether trials, and the Seventh Circuit affirmed one of those wins in July 2026.
    Abbott Laboratories release of 20 August 2026, Form 8-K exhibit 99.1 - agreements to resolve the Gill case and NEC claims on behalf of about 2,000 other infants for about $670 million; the $495 million Gill verdict; three federal MDL bellwether wins; about 1,700 lawsuits remaining on behalf of about 12,700 infants. — August 2026 · publ. 20 August 2026 · source ↗
  6. ReportedIt says the agreements are "not in any way an admission of liability", and the 10-Q said no reserves had been recorded for the NEC claims.
    Abbott Laboratories release of 20 August 2026, Form 8-K exhibit 99.1 - agreements to resolve the Gill case and NEC claims on behalf of about 2,000 other infants for about $670 million; the $495 million Gill verdict; three federal MDL bellwether wins; about 1,700 lawsuits remaining on behalf of about 12,700 infants. — August 2026 · publ. 20 August 2026 · source ↗
  7. ReportedIt says the agreements are "not in any way an admission of liability", and the 10-Q said no reserves had been recorded for the NEC claims.
    Abbott Laboratories Form 10-Q for the quarter ended 30 June 2026 - segment sales and operating earnings, the Exact Sciences acquisition and purchase-price allocation, the $20.0 billion of notes, remaining performance obligations, goodwill by segment, expected amortization, legal reserves and the NEC litigation, and the balance sheet at 30 June 2026 - legal proceedings: NEC litigation, reserves and the range of possible loss. — Q2 2026 · publ. 28 July 2026 · source ↗
  8. ReportedAbbott calls the litigation something whose resolution "could be material" to its financial position.
    Abbott Laboratories Form 10-Q for the quarter ended 30 June 2026 - segment sales and operating earnings, the Exact Sciences acquisition and purchase-price allocation, the $20.0 billion of notes, remaining performance obligations, goodwill by segment, expected amortization, legal reserves and the NEC litigation, and the balance sheet at 30 June 2026 - legal proceedings: NEC litigation, reserves and the range of possible loss. — Q2 2026 · publ. 28 July 2026 · source ↗
  9. ReportedIn September 2026 Abbott agreed to pay $384,999,040 to settle False Claims Act allegations over formula made at Sturgis and Casa Grande, and recorded a $385 million legal reserve in the second quarter.
    US Department of Justice release, September 2026 - Abbott agrees to pay $384,999,040 to resolve False Claims Act allegations over powder infant formula made at Sturgis, Michigan and Casa Grande, Arizona between 1 January 2018 and 31 December 2022; complaint in intervention filed 13 November 2025. — September 2026 · publ. September 2026 · source ↗
  10. ReportedIn September 2026 Abbott agreed to pay $384,999,040 to settle False Claims Act allegations over formula made at Sturgis and Casa Grande, and recorded a $385 million legal reserve in the second quarter.
    Abbott Laboratories second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - sales by segment and business, comparable growth, income statement, specified items, guidance and the 410th consecutive quarterly dividend - total sales, income statement, specified items, tax rate, guidance and the dividend. — Q2 2026 · publ. 16 July 2026 · source ↗
  11. ReportedIn an October 2024 Missouri trial involving Abbott, another formula maker and the treating hospital, the jury returned "a unanimous verdict for Abbott and its co-defendants", though the court granted a new trial in March 2025.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  12. ReportedIn an October 2024 Missouri trial involving Abbott, another formula maker and the treating hospital, the jury returned "a unanimous verdict for Abbott and its co-defendants", though the court granted a new trial in March 2025.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1 and MD&A for Nutritional Products: pediatric and adult nutrition in the US and abroad. — FY2025 · publ. 20 February 2026 · source ↗
  13. ReportedShareholders also sued the directors over the formula problems, and that derivative case was settled with governance reforms, with a hearing set for 4 June 2026.
    Notice of settlement of In re Abbott Laboratories Infant Formula Shareholder Derivative Litigation (N.D. Ill.), Form 8-K exhibit 99.1, with corporate governance reforms and a 4 June 2026 hearing. — April 2026 · publ. 17 April 2026 · source ↗
  14. ReportedThe 10-K notes requests from the Federal Trade Commission about bids for WIC formula contracts and multiple civil lawsuits over the manufacturing of powdered infant formula.
    Abbott Laboratories Form 10-K for 2025 (year ended 31 December 2025) - Item 1A risk factors, competition, regulation and legal proceedings. — FY2025 · publ. 20 February 2026 · source ↗
Sources
Generated October 6, 2026