The FINANCIAL — Abbott on July 20 announced financial results for the second quarter ended June 30, 2017.
Second-quarter worldwide sales of $6.6 billion increased 24.4 percent on a reported basis and 2.9 percent on a comparable operational basis.
Reported diluted EPS from continuing operations under GAAP was $0.15 in the second quarter. Excluding specified items, adjusted diluted EPS from continuing operations was $0.62 in the second quarter, above the previous guidance range of $0.59 to $0.61.
Abbott is raising its full-year 2017 EPS guidance range, which continues to reflect double-digit growth. Abbott projects full-year diluted EPS from continuing operations on a GAAP basis of $1.03 to $1.13. Projected full-year adjusted diluted EPS from continuing operations is now $2.43 to $2.53.
In the second quarter, Abbott submitted for FDA approval of MRI-conditional labeling for its Quadra AssuraTM Cardiac Resynchronization Therapy Defibrillator (CRT-D) products and QuartetTM family of left ventricular leads.
In May, Abbott announced CE Mark of the new Confirm RxTM Insertable Cardiac Monitor (ICM), the world’s first smartphone compatible ICM that helps physicians detect cardiac arrhythmias in order to guide therapy.
In June, Abbott announced CE Mark of its new AlinityTM hq hematology system, which identifies and quantifies different types of blood cells to help diagnose blood-related diseases. Alinity hq represents the fifth new diagnostic system the company has launched in Europe since November 2016.
In June, Abbott announced its FreeStyle Libre glucose monitoring system received regulatory approval in Canada and national reimbursement in France. This revolutionary system transforms how people test their glucose levels by providing a convenient alternative to painful finger sticks.
“Halfway through the year, we’re on track with all of our key priorities, including the integration of St. Jude and growth contributions from our pipeline,” said Miles D. White, chairman and chief executive officer, Abbott. “We’re also raising our full-year guidance range as we continue to target double-digit ongoing EPS growth.”
Comparable operational sales growth excludes the impact of exchange and for Total Abbott and Medical Devices, also includes prior year results for St. Jude Medical, which was acquired on Jan. 4, 2017, and excludes prior year and current year results for the Abbott Medical Optics (AMO) and St. Jude Medical vascular closure businesses, which were divested during the first quarter 2017. Comparable operational sales growth also reflects a reduction to St. Jude Medical’s historic sales related to administrative fees paid to conform to Abbott’s presentation, as further described in Form 8-K issued on April 18, 2017.
Second-quarter 2017 worldwide sales of $6.6 billion increased 24.4 percent on a reported basis. On a comparable operational basis, worldwide sales increased 2.9 percent. Sales growth in the quarter was impacted by purchasing patterns associated with the implementation of a new Goods and Services Tax (GST) system in India. Excluding this transitory impact, which primarily impacted Established Pharmaceuticals, total Abbott sales would have grown 25.3 percent on a reported basis and 3.7 percent on a comparable operational basis in the second quarter, according to Abbott.
Nutrition
Worldwide Nutrition sales decreased 0.6 percent on a reported basis in the second quarter, including an unfavorable 1.1 percent effect of foreign exchange, and increased 0.5 percent on an operational basis.
Worldwide Pediatric Nutrition sales increased 1.4 percent on a reported basis in the second quarter, including an unfavorable 1.1 percent effect of foreign exchange, and increased 2.5 percent on an operational basis. In the U.S., above-market sales growth was driven by recently launched new products across Abbott’s infant formula portfolio as well as strong growth of its PediaSure® toddler brand. International sales declined 3.7 percent on a reported basis and 1.8 percent on an operational basis. As expected, market conditions in China remain challenging.
Worldwide Adult Nutrition sales decreased 3.1 percent on a reported basis in the second quarter, including an unfavorable 1.1 percent effect of foreign exchange, and decreased 2.0 percent on an operational basis. Global Adult Nutrition sales were impacted by competitive and market dynamics.
Diagnostics
Worldwide Diagnostics sales increased 3.8 percent on a reported basis in the second quarter, including an unfavorable 1.6 percent effect of foreign exchange, and increased 5.4 percent on an operational basis.
Core Laboratory Diagnostics sales increased 4.2 percent on a reported basis in the second quarter, including an unfavorable 1.9 percent effect of foreign exchange, and increased 6.1 percent on an operational basis. In the U.S., double-digit growth was driven by share capture in Abbott’s blood screening business. During the quarter, Abbott announced CE Mark of its new Alinity hq hematology system to identify and quantify different types of blood cells to help diagnose blood-related diseases. Alinity hq represents the fifth new diagnostic system the company has launched in Europe since November 2016.
Molecular Diagnostics sales decreased 4.5 percent on a reported basis in the second quarter, including an unfavorable 0.4 percent effect of foreign exchange, and decreased 4.1 percent on an operational basis. Continued growth in infectious disease testing, Abbott’s core area of focus in the molecular diagnostics market, was offset by a planned scale down in other testing areas.
Point of Care Diagnostics sales increased 8.6 percent on a reported basis in the second quarter, including an unfavorable 0.3 percent effect of foreign exchange, and increased 8.9 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 strong growth internationally.
Established Pharmaceuticals
Established Pharmaceuticals sales increased 4.1 percent on a reported basis in the second quarter, including a favorable 0.6 percent effect of foreign exchange, and increased 3.5 percent on an operational basis. Sales growth in the quarter was impacted by purchasing patterns associated with the implementation of a new Goods and Services Tax (GST) system in India. Excluding this transitory impact, total Established Pharmaceutical sales would have grown in the high-single digits in the second quarter.
Key Emerging Markets include Brazil, Russia, India and China, along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these key geographies increased 5.8 percent on a reported basis and 4.6 percent on an operational basis in the second quarter. Strong growth in Russia, China, and several countries across Latin America was partially offset by the impact associated with implementation of a new GST system in India. Excluding this transitory impact, sales in Key Emerging Markets would have grown double-digits in the second quarter.
Medical Devices
Worldwide Medical Devices sales increased 89.2 percent on a reported basis in the second quarter. On a comparable operational basis, sales increased 3.2 percent, or 4.4 percent excluding the comparison impact from the favorable resolution of a third-party royalty agreement last year. Refer to the tables titled Non-GAAP Reconciliation of Comparable Historical Revenue for additional detail.
Worldwide sales of Cardiovascular and Neuromodulation products were led by strong growth in Electrophysiology, Structural Heart and Neuromodulation. In Electrophysiology, Abbott announced the European launch of its Confirm Rx Insertable Cardiac Monitor (ICM), the world’s first smartphone compatible ICM that helps physicians detect cardiac arrhythmias in order to guide therapy. Growth in Structural Heart was driven by continued double-digit growth of MitraClip®, Abbott’s market-leading device for the treatment of mitral regurgitation. In Neuromodulation, strong double-digit growth was led by several recently launched products for the treatment of chronic pain and movement disorders. As expected, Rhythm Management sales in the U.S. were impacted by continued competitive dynamics in the MRI-conditional category of products. In the quarter, Abbott submitted for FDA approval of MRI-conditional labeling for its Quadra Assura Cardiac Resynchronization Therapy Defibrillator (CRT-D) products and Quartet family of left ventricular leads
Worldwide Diabetes Care sales increased 18.7 percent on a reported basis in the second quarter, including an unfavorable 2.6 percent effect of foreign exchange, and increased 21.3 percent on an operational basis. Strong double-digit international sales growth was led by continued consumer uptake of FreeStyle Libre, Abbott’s revolutionary sensor-based glucose monitoring system, which received regulatory approval in Canada in June and is now available for sale in more than thirty-five countries.
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