The FINANCIAL — Abbott on October 18 announced financial results for the third quarter ended Sept. 30, 2017.
Third-quarter worldwide sales of $6.8 billion increased 28.8 percent on a reported basis and 5.6 percent on a comparable operational basis.
Reported diluted EPS from continuing operations under GAAP was $0.32 in the third quarter. Excluding specified items, adjusted diluted EPS from continuing operations was $0.66 in the third quarter, at the high end of the previous guidance range of $0.64 to $0.66.
Abbott narrowed 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 $0.97 to $0.99. Projected full-year adjusted diluted EPS from continuing operations is now $2.48 to $2.50, which represents an increase at the mid-point of the guidance range.
In September, Abbott received U.S. FDA approval for its FreeStyle Libre glucose monitoring system as a replacement1 for finger stick blood glucose monitoring. This revolutionary technology is the only system available that comes factory-calibrated, thus eliminating the need for daily finger sticks that are required to calibrate other continuous glucose monitoring systems, according to Abbott.
During the quarter, Abbott obtained national reimbursement for FreeStyle Libre in Japan and the United Kingdom for people with diabetes, both Type 1 and Type 2, on insulin therapy.
In September, Abbott received U.S. FDA approval for magnetic resonance (MR)-conditional labeling for its EllipseTM implantable cardioverter defibrillator (ICD). This approval follows U.S. FDA approval for MR-conditional labeling for its Assurity MRITM pacemaker earlier this year.
In August, Abbott received U.S. FDA approval for its HeartMate 3TM system, which helps a weak heart pump blood for patients with advanced heart failure.
On Oct. 3, 2017, Abbott completed the acquisition of Alere, Inc., establishing Abbott as the global leader in the point of care diagnostics market.
“We’re very pleased with our performance and the steady cadence of innovative new product launches that are contributing to growth,” said Miles D. White, chairman and chief executive officer, Abbott. “We’re well-positioned to achieve the upper end of our initial full-year EPS guidance range.”
In 2017, total Abbott sales from continuing operations include Other Sales of $220 million, including sales of $175 million from the AMO business, which was divested during the first quarter 2017. In 2016, the AMO business was reported as part of the Medical Devices group. Comparable operational growth rates above exclude results from the AMO business.
Third-quarter 2017 worldwide sales of $6.8 billion increased 28.8 percent on a reported basis. On a comparable operational basis, worldwide sales increased 5.6 percent. Refer to tables titled “Non-GAAP Reconciliation of Comparable Historical Revenue” for a reconciliation of comparable historical revenue.
Nutrition
Worldwide Nutrition sales increased 0.8 percent on a reported and operational basis in the third quarter.
Worldwide Pediatric Nutrition sales increased 0.8 percent on a reported basis in the third quarter, including a favorable 0.1 percent effect of foreign exchange, and increased 0.7 percent on an operational basis. Sales growth in the quarter was led by above-market growth in the U.S. with continued strong performance across Abbott’s portfolio of infant and pediatric nutrition products. As expected, sales growth in China improved sequentially versus the prior quarter, which was offset by continued challenging market conditions in certain other international countries.
Worldwide Adult Nutrition sales increased 0.7 percent on a reported basis in the third quarter, including an unfavorable 0.2 percent effect of foreign exchange, and increased 0.9 percent on an operational basis. International sales growth of 5.2 percent on a reported basis and 5.6 percent on an operational basis was led by growth of Ensure, Abbott’s market-leading complete and balanced nutrition brand, and Glucerna®, Abbott’s market-leading diabetes-specific nutrition brand. As expected, U.S. sales growth was impacted by competitive and market dynamics.
Diagnostics
Worldwide Diagnostics sales increased 5.4 percent on a reported basis in the third quarter, including a favorable 0.2 percent effect of foreign exchange, and increased 5.2 percent on an operational basis.
Core Laboratory Diagnostics sales increased 5.7 percent on a reported basis in the third quarter, including a favorable 0.1 percent effect of foreign exchange, and increased 5.6 percent on an operational basis. Growth in the quarter was led by continued share gains globally. Internationally, Abbott continued the early roll-out of its recently launched Alinity systems for the core laboratory, including “Alinity c” for clinical chemistry, “Alinity i” for immunoassay diagnostics and “Alinity s” for blood and plasma screening. Abbott expects to initiate the launch of its Alinity systems in the U.S. in 2018.
Molecular Diagnostics sales increased 2.7 percent on a reported basis in the third quarter, including a favorable 1.6 percent effect of foreign exchange, and increased 1.1 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 5.8 percent on a reported basis in the third quarter, including a favorable 0.2 percent effect of foreign exchange, and increased 5.6 percent on an operational basis as this business continues to build and expand its presence in targeted developed and emerging markets.
Established Pharmaceuticals
Established Pharmaceuticals sales increased 15.7 percent on a reported basis in the third quarter, including a favorable 1.4 percent effect of foreign exchange, and increased 14.3 percent on an operational basis.
Key Emerging Markets comprise several countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these key geographies increased 18.5 percent on a reported basis and 18.0 percent on an operational basis in the third quarter, led by strong growth across several countries, including double-digit growth in Brazil, Russia, India and China.
As expected, sales in India were positively impacted by purchasing patterns following the implementation of a new Goods and Services Tax system that lowered second quarter sales in that country. Total Established Pharmaceuticals, Key Emerging Markets, and India sales growth increased double-digits with and without this impact.
Medical Devices
Worldwide Medical Devices sales increased 98.2 percent on a reported basis in the third quarter. On a comparable operational basis, sales increased 5.6 percent.
In Cardiovascular and Neuromodulation, worldwide sales were led by double-digit growth in Electrophysiology, Structural Heart, Heart Failure and Neuromodulation. Growth in Structural Heart was driven by the continued double-digit growth of MitraClip®, Abbott’s market-leading device for the minimally-invasive treatment of mitral regurgitation. In Heart Failure, during the third quarter, Abbott received U.S. FDA approval for its HeartMate 3 system, which helps a weak heart pump blood through the body for patients with advanced heart failure. In Neuromodulation, another quarter of 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 magnetic resonance (MR)-conditional category of products. In the quarter, Abbott received FDA approval for MR-conditional labeling for its Ellipse implantable cardioverter defibrillator (ICD), which significantly enhances its competitive position in this category of the market.
Worldwide Diabetes Care sales increased 21.7 percent on a reported basis in the third quarter, including a favorable 2.6 percent effect of foreign exchange, and increased 19.1 percent on an operational basis. Strong double-digit international sales growth was led by FreeStyle Libre, Abbott’s revolutionary sensor-based glucose monitoring system. In September, Abbott received U.S. FDA approval for FreeStyle Libre as a replacement1 for finger stick blood glucose monitoring. This revolutionary technology is the only system available that comes factory-calibrated, thus eliminating the need for daily finger sticks that are required to calibrate other systems currently available. During the quarter, Abbott also obtained national reimbursement for FreeStyle Libre in Japan and the United Kingdom for people with diabetes, both Type 1 and Type 2, on insulin therapy.
ABBOTT NARROWS FULL-YEAR EARNINGS-PER-SHARE GUIDANCE
Abbott is narrowing its full-year 2017 earnings per share guidance range, which continues to reflect double-digit growth. Abbott now projects its earning per share from continuing operations under Generally Accepted Accounting Principles (GAAP) to be $0.97 to $0.99 for the full year 2017.
Projected diluted earnings per share from continuing operations on an adjusted basis is now $2.48 to $2.50 for the full year 2017, which represents an increase at the mid-point of the guidance range.
Abbott forecasts net specified items for the full year 2017 of approximately $1.51 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 AMO business.
Abbott is issuing fourth-quarter 2017 guidance for diluted earnings per share from continuing operations under GAAP of $0.28 to $0.30. Abbott forecasts specified items for the fourth quarter 2017 of $0.44 primarily related to intangible amortization, acquisition-related expenses, cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $0.72 to $0.74 for the fourth quarter.
ABBOTT DECLARES 375TH QUARTERLY DIVIDEND
On Sept. 14, 2017, the board of directors of Abbott declared the company’s quarterly dividend of $0.265 per share. Abbott’s cash dividend is payable Nov. 15, 2017, to shareholders of record at the close of business on Oct. 13, 2017.
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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