The FINANCIAL — Abbott on January 24 announced financial results for the fourth quarter ended Dec. 31, 2016.
Reported diluted EPS from continuing operations under GAAP was $0.51 in the fourth quarter. Excluding specified items, adjusted diluted EPS from continuing operations was $0.65 in the fourth quarter, in-line with the previous guidance range.
Fourth-quarter worldwide sales of $5.3 billion increased 2.8 percent on a reported basis and 3.8 percent on an operational basis.
Full-year worldwide sales increased 2.2 percent on a reported basis and 4.8 percent on an operational basis.
Abbott issues full-year 2017 guidance range for diluted EPS from continuing operations under GAAP of $0.92 to $1.02, including intangible amortization and integration expenses related to the acquisition of St. Jude Medical. Excluding specified items, projected full-year 2017 adjusted diluted EPS from continuing operations is $2.40 to $2.50.
In the fourth quarter, Abbott obtained CE Mark for four new major diagnostics systems, including “AlinityTM s” for blood and plasma screening, “Alinity i” for immunoassay diagnostics, “Alinity c” for clinical chemistry diagnostics and “i-STAT Alinity” for point of care blood testing. Abbott’s Alinity family of solutions are designed to be more efficient – running more tests in less space, generating test results faster and minimizing human errors – while continuing to provide quality results.
On Jan. 4, 2017, Abbott completed the acquisition of St. Jude Medical, establishing the company as a leader in the broad medical device arena and providing expanded opportunities for future growth. With the acquisition, Abbott now competes in nearly every area of the $30 billion cardiovascular device market and holds No. 1 or 2 positions across several large and high-growth cardiovascular device areas.
“2016 was a very important year for Abbott,” said Miles D. White, chairman and chief executive officer, Abbott. “We achieved our financial commitments, advanced our internal pipeline, and took important strategic steps to shape the company for balance and growth.”
Fourth-quarter 2016 worldwide sales of $5.3 billion increased 2.8 percent on a reported basis, including an unfavorable 1.0 percent effect of foreign exchange, and increased 3.8 percent on an operational basis.
Full-year 2016 worldwide sales increased 2.2 percent on a reported basis and 4.8 percent on an operational basis.
Nutrition
($ in millions)
Worldwide Nutrition sales decreased 3.7 percent on a reported basis in the fourth quarter, including an unfavorable 1.1 percent effect of foreign exchange, and decreased 2.6 percent on an operational basis.
Worldwide Pediatric Nutrition sales decreased 5.4 percent on a reported basis in the fourth quarter, including an unfavorable 1.1 percent effect of foreign exchange, and decreased 4.3 percent on an operational basis. In the U.S., above-market sales growth was led by Abbott’s PediaSure toddler brand as well as continued uptake of several recently launched infant formula products, including the first formulas in the U.S. with a human milk oligosaccharide that offers a unique immune-nourishing prebiotic. International sales declined 13.1 percent on a reported basis and 11.2 percent on an operational basis. Challenging market conditions in China and market softness in Saudi offset continued strong performance in Latin America and Southeast Asia.
Worldwide Adult Nutrition sales decreased 1.4 percent on a reported basis in the fourth quarter, including an unfavorable 1.0 percent effect of foreign exchange, and decreased 0.4 percent on an operational basis. In the quarter, worldwide growth of Ensure was offset primarily by a difficult comparison to fourth quarter 2015, which included new product distributions in the U.S. and China, according to Abbott.
Diagnostics
($ in millions)
Worldwide Diagnostics sales increased 2.9 percent on a reported basis in the fourth quarter, including an unfavorable 1.0 percent effect of foreign exchange, and increased 3.9 percent on an operational basis.
Core Laboratory Diagnostics sales increased 3.6 percent on a reported basis in the fourth quarter, including an unfavorable 1.2 percent effect of foreign exchange, and increased 4.8 percent on an operational basis. During the quarter, Abbott obtained CE Mark for several Alinity core laboratory systems, including “Alinity s” for blood and plasma screening, “Alinity c” for clinical chemistry, and “Alinity i” for immunoassay diagnostics. These instruments belong to Abbott’s new Alinity family of harmonized systems, which were designed to be more efficient – running more tests in less space, generating test results faster and minimizing human errors – while continuing to provide quality results.
Molecular Diagnostics sales decreased 7.6 percent on a reported basis in the fourth quarter, including an unfavorable 0.7 percent effect of foreign exchange, and decreased 6.9 percent on an operational basis. As expected, the planned scale down of the genetics business offset growth in the infectious disease testing business.
Point of Care Diagnostics sales increased 8.1 percent on a reported basis in the fourth quarter, including a favorable 0.1 percent effect of foreign exchange, and increased 8.0 percent on an operational basis. Sales growth in the quarter was led by continued adoption of Abbott’s i-STAT handheld system in the U.S. and ongoing international market expansion. During the quarter, Abbott obtained CE Mark for its i-STAT Alinity handheld portable blood testing system. By delivering results in ten minutes or less using only two to three drops of blood, i-STAT Alinity provides healthcare professionals the information needed to make fast and accurate medical decisions without ever leaving their patient’s side.
Established Pharmaceuticals
($ in millions)
Established Pharmaceuticals sales increased 10.6 percent on a reported basis in the fourth quarter, including an unfavorable 2.0 percent effect of foreign exchange, and increased 12.6 percent on an operational basis.
Key Emerging Markets include Brazil, Russia, India and China (BRIC), along with several additional emerging markets that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these key geographies increased 10.6 percent on a reported basis and 13.0 percent on an operational basis in the fourth quarter. Operational sales growth was led by double-digit growth in BRIC, which comprises approximately 45 percent of Abbott’s Established Pharmaceuticals sales, as well as strong growth in several countries throughout Latin America, including Colombia, Mexico, Peru and Argentina.
Medical Devices
($ in millions)
Worldwide Medical Devices sales increased 4.4 percent on a reported basis in the fourth quarter, including an unfavorable 0.3 percent effect of foreign exchange, and increased 4.7 percent on an operational basis.
Worldwide sales of Vascular products increased 2.9 percent on a reported basis in the fourth quarter, including an unfavorable 0.3 percent effect of foreign exchange, and increased 3.2 percent on an operational basis. Sales growth in Vascular products was led by double-digit growth of MitraClip, Abbott’s device for the treatment of mitral regurgitation, as Abbott continues to build the market for this first-in-class device. Strong sales growth in Abbott’s Endovascular business was driven by vessel closure products and Supera, Abbott’s unique stent for the treatment of blockages in the leg.
Worldwide Diabetes Care sales increased 4.5 percent on a reported basis in the fourth quarter, including an unfavorable 1.5 percent effect of foreign exchange, and increased 6.0 percent on an operational basis. Double-digit international sales growth was driven by continued consumer uptake of FreeStyle Libre, Abbott’s revolutionary continuous glucose monitoring system that eliminates the need for finger-sticks.
Worldwide Medical Optics sales increased 7.7 percent on a reported basis in the fourth quarter, including a favorable 0.8 percent effect of foreign exchange, and increased 6.9 percent on an operational basis. Operational sales growth was driven by the recent U.S. launch of the TECNIS® Symfony intraocular lenses, the first and only lenses in the U.S. that provide a full range of continuous high-quality vision following cataract surgery.
ABBOTT ISSUES EARNINGS-PER-SHARE OUTLOOK FOR 2017
Abbott is issuing full-year 2017 guidance for diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $0.92 to $1.02, including amortization and integration expenses related to the acquisition of St. Jude Medical.
Abbott forecasts net specified items for the full year 2017 of approximately $1.48 per share. Specified items include acquisition-related expenses, intangible amortization expense, charges associated with cost reduction initiatives and other expenses, partially offset by a gain on the sale of the Abbott Medical Optics business (AMO).
Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $2.40 to $2.50 for the full year 2017.
Abbott is issuing first-quarter 2017 guidance for diluted earnings per share from continuing operations under GAAP of $0.19 to $0.21. Abbott forecasts specified items for the first quarter 2017 of $0.23 related to the same items discussed above for the full year 2017. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $0.42 to $0.44 for the first quarter.
ABBOTT ANNOUNCES INCREASE IN QUARTERLY DIVIDEND
On Dec. 9, 2016, the board of directors of Abbott increased the company’s quarterly dividend to $0.265 per share from $0.260 per share. Abbott’s cash dividend is payable Feb. 15, 2017, to shareholders of record at the close of business on Jan. 13, 2017. This marks the 372nd consecutive quarterly dividend paid by Abbott.
Abbott has increased its dividend payout for 45 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.
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