Abbott ordered to pay $495M following baby-formula verdict

Abbott Laboratories' (ABT) stock is under pressure on Monday after a jury ruled that the company must pay $495 million in compensation and damages. The ruling comes after the jury found that Abbott failed to inform consumers that its formula for premature infants increased the risk of bowel disease. Abbott is expected to appeal.

Yahoo Finance health reporter Anjalee Khemalni breaks down the details.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Angel Smith

Video Transcript

Abbott chairs, looking unhealthy after a jury ordered the company to pay $495 million in compensation and damages, saying it did not warn consumers its formula.

U, used for premature infants raises the risk of bowel disease.

You find senior health care reporter Angeli Kani has more analysis.

Angel.

Yeah, that's right.

It's important to remember, first of all, that this is unrelated to the issue that the that Abbott had with its formula in with its Michigan plant.

Where remember that whole episode?

But this is unrelated, and it is an ongoing case from 2021.

We've seen that the company has had a number of lawsuits filed against it, as well as competitor uh, wreck Ben Kisser.

So these this is a second lawsuit in this broader look at NEC necrotizing colitis, which is the disease that has the fatal disease, that some of these babies have been received from the from the formula.

So the first lawsuit was actually 60 million, and that was in a different court in March.

This new one is much higher, and that's why a lot of investors are watching.

At 495 400 million of that is the punitive damages, and that's the one that can also move a little bit more, depending on how a judge feels like, according to the results of the jury came out with this number Judge still has to go through.

We know that Abbott is, of course, going to be, uh, appealing it just as record has for its in the past.

Now to point out what the investors are looking at, what a analysts are looking at.

J PM said in a note that following precedent from similar matters with talc, restaurants and opioids, we think the per settlement amount could fall into the 150 to 300 K range, translating to a total settlement of up to 1.5 billion as cases are filed.

You have to remember 1000 cases have been filed against these two companies, so it really is something to watch.

This area of Abbott's business continues to be, uh, you know, a problem for them continues to have this overhang of this case as well as the prior issues, and so that's definitely something to watch, despite any positive results from earnings.

All right, we'll continue to keep an eye on shares going into the opening bell here.

Angeli Thanks so much