On April 19, 2023 Abbott (NYSE: ABT) reported financial results for the first quarter ended March 31, 2023 (Press release, Abbott, APR 19, 2023, View Source [SID1234630294]).
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First-quarter GAAP diluted EPS of $0.75 and adjusted diluted EPS of $1.03, which excludes specified items.
Projected full-year 2023 diluted EPS from continuing operations on a GAAP basis of $3.05 to $3.25 remains unchanged.
Projected full-year adjusted EPS from continuing operations of $4.30 to $4.50 remains unchanged and now reflects an increased outlook for the underlying base business offset by a lower forecasted earnings contribution from COVID-19 testing-related sales.
Abbott now projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales1, of at least high single-digits2 and COVID-19 testing-related sales of approximately $1.5 billion.
In January, Abbott announced U.S. Food and Drug Administration (FDA) approval of Navitor, its second-generation transcatheter aortic valve implantation system, for people with severe aortic stenosis who are at high risk for surgery.
In March, data was presented at the American College of Cardiology Scientific Sessions showing Abbott’s TriClip system was superior to current medical therapy in treating patients with severe tricuspid regurgitation, or a leaky tricuspid heart valve.
In March, Abbott’s market-leading FreeStyle Libre continuous glucose monitoring system received U.S. FDA clearance for integration with automated insulin delivery systems. Abbott is partnering with leading insulin pump manufacturers to integrate their systems with FreeStyle Libre 2 and FreeStyle Libre 3 as soon as possible.
"Our first-quarter results reflect a very strong start to the year," said Robert B. Ford, chairman and chief executive officer, Abbott. "Growth in our underlying base businesses accelerated, including particularly strong results in Medical Devices, Established Pharmaceuticals and Nutrition."
FIRST-QUARTER BUSINESS OVERVIEW
Management believes that measuring sales growth rates on an organic basis, which excludes the impact of foreign exchange, as well as the impact of exiting the pediatric nutrition business in China, is an appropriate way for investors to best understand the core underlying performance of the business.
Management further believes that measuring sales growth rates on an organic basis excluding COVID-19 tests is an appropriate way for investors to best understand underlying base business performance as the COVID-19 pandemic shifts to an endemic state, resulting in significantly lower expected demand for COVID-19 tests.
Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.
Total Company
Reported Sales
Sales 1Q23 ($ in millions)
Total Company
Nutrition
Diagnostics
Established
Pharmaceuticals
Medical Devices
U.S.
3,928
812
1,335
—
1,778
International
5,819
1,155
1,353
1,189
2,122
Total reported
9,747
1,967
2,688
1,189
3,900
% Change vs. 1Q22
U.S.
(20.4)
19.9
(50.8)
n/a
15.1
International
(16.4)
(5.1)
(46.9)
3.7
3.5
Total reported
(18.1)
3.8
(48.9)
3.7
8.5
Organic Sales
% Change vs. 1Q22
Total Company
Nutrition
Diagnostics
Established
Pharmaceuticals
Medical Devices
Reported
(18.1)
3.8
(48.9)
3.7
8.5
Impact of foreign exchange
(3.3)
(3.9)
(1.8)
(7.4)
(3.9)
Impact of business exit
(0.3)
(2.6)
—
—
—
Organic
(14.5)
10.3
(47.1)
11.1
12.4
Impact of COVID-19 testing sales3
(24.5)
—
(51.5)
—
—
Organic excluding COVID-19 tests
10.0
10.3
4.4
11.1
12.4
U.S.
12.6
19.9
0.3
n/a
15.1
International
8.6
4.8
6.8
11.1
10.4
n/a = Not Applicable.
Refer to table titled "Non-GAAP Revenue Reconciliation" for a reconciliation of adjusted historical revenue to reported revenue.
Nutrition
Reported Sales
Sales 1Q23 ($ in millions)
Total
Pediatric
Adult
U.S.
812
459
353
International
1,155
465
690
Total reported
1,967
924
1,043
% Change vs. 1Q22
U.S.
19.9
36.1
3.9
International
(5.1)
(8.6)
(2.6)
Total reported
3.8
9.2
(0.5)
Organic Sales
% Change vs. 1Q22
Total
Pediatric
Adult
Reported
3.8
9.2
(0.5)
Impact of foreign exchange
(3.9)
(2.8)
(4.7)
Impact of business exit
(2.6)
(6.4)
—
Organic
10.3
18.4
4.2
U.S.
19.9
36.1
3.9
International
4.8
5.3
4.4
Worldwide Nutrition sales increased 3.8 percent on a reported basis and 10.3 percent on an organic basis in the first quarter. Refer to table titled "Non-GAAP Revenue Reconciliation" for a reconciliation of adjusted historical revenue to reported revenue.
In Pediatric Nutrition, global sales increased 9.2 percent on a reported basis and 18.4 percent on an organic basis. In the U.S., sales growth of 36.1 percent includes the impact of lower sales in the first quarter of the prior year due to a voluntary recall of certain infant formula products. Following a temporary manufacturing stoppage of these products, Abbott subsequently restarted production last year and continues to make good progress recovering market share in this business.
In Adult Nutrition, global sales decreased 0.5 percent on a reported basis and increased 4.2 percent on an organic basis, which was led by strong global growth of Ensure, Abbott’s market-leading complete and balanced nutrition brand.
Diagnostics
Reported Sales
Sales 1Q23 ($ in millions)
Total
Core Laboratory
Molecular
Point of Care
Rapid
Diagnostics *
U.S.
1,335
289
47
93
906
International
1,353
893
100
41
319
Total reported
2,688
1,182
147
134
1,225
% Change vs. 1Q22
U.S.
(50.8)
7.7
(72.7)
2.9
(58.4)
International
(46.9)
(2.5)
(59.7)
9.2
(76.3)
Total reported
(48.9)
(0.2)
(65.0)
4.7
(65.3)
Organic Sales
% Change vs. 1Q22
Total
Core Laboratory
Molecular
Point of Care
Rapid
Diagnostics *
Reported
(48.9)
(0.2)
(65.0)
4.7
(65.3)
Impact of foreign exchange
(1.8)
(5.3)
(1.0)
(1.0)
(0.8)
Organic
(47.1)
5.1
(64.0)
5.7
(64.5)
Impact of COVID-19 testing sales3
(51.5)
(2.0)
(39.2)
—
(72.5)
Organic excluding COVID-19 tests
4.4
7.1
(24.8)
5.7
8.0
U.S.
0.3
9.0
(36.7)
2.9
(0.9)
International
6.8
6.5
(18.9)
12.7
23.2
*The Acelis Connected Health business was internally transferred from Rapid Diagnostics to Heart Failure on January 1, 2023. As a result, $29 million of sales for the first quarter of 2022 were moved from Rapid Diagnostics to Heart Failure.
As expected, Diagnostics sales growth in the first quarter was negatively impacted by year-over-year declines in COVID-19 testing-related sales3. Worldwide COVID-19 testing sales were $730 million in the first quarter of 2023 compared to $3.304 billion in the first quarter of the prior year.
Excluding COVID-19 testing-related sales, global Diagnostics sales increased 0.2 percent on a reported basis and increased 4.4 percent on an organic basis. Organic sales growth, excluding COVID-19 testing-related sales, was led by Core Laboratory, Point of Care and Rapid Diagnostics. In Molecular Diagnostics, growth was negatively impacted by lower demand for seasonal respiratory testing compared to significantly higher-than-usual demand in the first quarter of the prior year.
Established Pharmaceuticals
Reported Sales
Sales 1Q23 ($ in millions)
Total
Key Emerging
Markets
Other
U.S.
—
—
—
International
1,189
912
277
Total reported
1,189
912
277
% Change vs. 1Q22
U.S.
n/a
n/a
n/a
International
3.7
0.7
15.0
Total reported
3.7
0.7
15.0
Organic Sales
% Change vs. 1Q22
Total
Key Emerging
Markets
Other
Reported
3.7
0.7
15.0
Impact of foreign exchange
(7.4)
(7.6)
(6.8)
Organic
11.1
8.3
21.8
U.S.
n/a
n/a
n/a
International
11.1
8.3
21.8
Established Pharmaceuticals sales increased 3.7 percent on a reported basis and 11.1 percent on an organic basis in the first quarter.
Key Emerging Markets include several emerging countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these geographies increased 0.7 percent on a reported basis and 8.3 percent on an organic basis, led by growth in Brazil, China and Southeast Asia, and across several therapeutic areas, including cardiometabolic, respiratory and central nervous system/pain management.
Medical Devices
Reported Sales
Sales 1Q23 ($ in millions)
Total
Rhythm
Management
Electro-
physiology
Heart
Failure *
Vascular
Structural
Heart
Neuro-
modulation
Diabetes
Care
U.S.
1,778
260
238
218
218
210
155
479
International
2,122
267
267
63
399
251
41
834
Total reported
3,900
527
505
281
617
461
196
1,313
% Change vs. 1Q22
U.S.
15.1
4.4
10.0
11.3
4.8
10.5
8.4
39.7
International
3.5
(3.2)
(1.0)
16.6
(2.7)
13.7
13.5
6.5
Total reported
8.5
0.4
3.9
12.4
(0.2)
12.2
9.4
16.6
Organic Sales
% Change vs. 1Q22
Total
Rhythm
Management
Electro-
physiology
Heart
Failure *
Vascular
Structural
Heart
Neuro-
modulation
Diabetes
Care
Reported
8.5
0.4
3.9
12.4
(0.2)
12.2
9.4
16.6
Impact of foreign exchange
(3.9)
(3.6)
(4.9)
(1.2)
(4.1)
(4.2)
(1.8)
(4.4)
Organic
12.4
4.0
8.8
13.6
3.9
16.4
11.2
21.0
U.S.
15.1
4.4
10.0
11.3
4.8
10.5
8.4
39.7
International
10.4
3.7
7.8
22.3
3.4
21.4
22.5
12.9
*The Acelis Connected Health business was internally transferred from Rapid Diagnostics to Heart Failure on January 1, 2023. As a result, $29 million of sales for the first quarter of 2022 were moved from Rapid Diagnostics to Heart Failure.
Worldwide Medical Devices sales increased 8.5 percent on a reported basis and 12.4 percent on an organic basis in the first quarter, including double-digit organic sales growth in both the U.S. and internationally.
Sales growth was led by double-digit organic growth in Diabetes Care, Structural Heart, Heart Failure and Neuromodulation. Several recently launched products and new indications contributed to the strong performance, including Amplatzer Amulet, Navitor, TriClip, Aveir and CardioMEMS.
In Electrophysiology, internationally, sales grew double-digits on a reported basis and high-teens on an organic basis in Europe, which was partially offset by soft market conditions in China during the first several weeks of the first quarter.
In Diabetes Care, FreeStyle Libre sales were $1.2 billion, which included U.S. growth of approximately 50 percent.
ABBOTT’S EARNINGS-PER-SHARE GUIDANCE
Abbott projects full-year 2023 diluted earnings per share from continuing operations under GAAP of $3.05 to $3.25. Abbott forecasts specified items for the full-year 2023 of $1.25 per share primarily related to intangible amortization, restructuring and cost reduction initiatives and other net expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $4.30 to $4.50 for the full-year 2023.
ABBOTT DECLARES 397TH CONSECUTIVE QUARTERLY DIVIDEND
On February 17, 2023, the board of directors of Abbott declared the company’s quarterly dividend of $0.51 per share. Abbott’s cash dividend is payable May 15, 2023, to shareholders of record at the close of business on April 14, 2023.
Abbott has increased its dividend payout for 51 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.