ABT
Big check, bigger headache
Abbott decided it was done playing legal whack-a-mole. The company reached a $670 million settlement to resolve the Gill lawsuit and roughly 2,000 related claims tied to its premature infant formulas and allegations they were linked to necrotizing enterocolitis, or NEC.
That matters because this wasn’t just some nuisance suit. A St. Louis jury had already handed down a $495 million verdict in July 2024, and after the Missouri Court of Appeals shut the door on the company’s December 2024 appeal, Abbott was staring at a bill that had swelled to about $600 million with damages and interest.
Why settle now?
Instead of dragging the case through more appeals, Abbott is paying up and trying to move on. The company says the deal isn’t an admission of fault, and it’s still pointing to FDA and CDC positions that say these medically necessary products haven’t been reliably tied to NEC.
Investors should care for two reasons:
- It removes one of Abbott’s nastiest legal overhangs, which is never a bad thing for a stock trying to breathe normally.
- It could set a template for the remaining litigation, which is still very much alive.
The bill isn’t fully paid yet
Even with this settlement, Abbott says about 1,700 lawsuits representing roughly 12,700 infants are still pending. The company is still trying to trim that pile by challenging overlapping claims, cases without NEC diagnoses, and lawsuits where it’s not even clear which manufacturer’s formula was used.
So yes, this is progress. But it’s not the end of the movie — more like the part where the studio says there are definitely sequels.
Big picture: Abbott just bought itself some legal breathing room, but the infant formula saga still has plenty of plot left, and Wall Street will be watching whether this settlement becomes a one-off or the start of a much bigger cleanup.