On January 24, 2018 Abbott (NYSE: ABT) reported financial results for the fourth quarter ended Dec. 31, 2017 (Press release, Abbott, JAN 24, 2018, View Source [SID1234523542]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Fourth-quarter worldwide sales of $7.6 billion increased 42.3 percent on a reported basis and 7.7 percent on a comparable operational* basis.
Reported diluted EPS from continuing operations under GAAP was a $(0.50) loss in the fourth quarter, primarily due to the net expense of $1.46 billion for the estimated1 impact of the Tax Cuts and Jobs Act (U.S. tax reform). Excluding the impact of U.S. tax reform and other specified items, adjusted diluted EPS from continuing operations was $0.74 in the fourth quarter, at the high end of the previous guidance range of $0.72 to $0.74.
Abbott issues full-year 2018 guidance for diluted EPS from continuing operations on a GAAP basis of $1.22 to $1.32. Projected full-year adjusted diluted EPS from continuing operations is $2.80 to $2.90, reflecting 14.0 percent growth2 at the midpoint.
In October, Abbott received U.S. FDA clearance for its Confirm Rx Insertable Cardiac Monitor (ICM), the world’s first and only smartphone-compatible ICM designed to help physicians remotely identify cardiac arrhythmias, and obtained CE Mark for XIENCE Sierra, the newest generation of the company’s gold-standard XIENCE everolimus-eluting coronary stent system.
In November, Abbott initiated the U.S. launch of FreeStyle Libre, the only continuous glucose monitoring (CGM) system available that comes factory-calibrated and removes the need for routine fingersticks3 for people with diabetes. In January, Abbott announced that FreeStyle Libre is now available and approved for coverage by the U.S. Center for Medicare & Medicaid Services (CMS).
In December, Abbott received U.S. FDA approval for magnetic resonance (MR)-conditional labeling for its Quadra Assura and Quadra Assura MP cardiac resynchronization therapy defibrillator (CRT-D) devices and its Fortify Assura implantable cardioverter defibrillator (ICD). With these approvals, Abbott has MR-conditional labeling for its full suite of pacemaker, ICD and CRT-D devices.
"2017 was a great year for us – we performed well, our new product pipeline was highly productive and we took some very important strategic steps forward," said Miles D. White, chairman and chief executive officer, Abbott. "We’re entering 2018 with very good momentum."
FOURTH-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on a comparable operational basis is an appropriate way for investors to best understand the underlying performance of the business.
Comparable operational sales growth:
Includes prior year results for St. Jude Medical, which was acquired on Jan. 4, 2017, and reflects a reduction to St. Jude Medical’s historic sales related to administrative fees paid to conform to Abbott’s presentation;
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;
Excludes the current year results for Rapid Diagnostics, which reflect results for Alere, Inc., which was acquired on Oct. 3, 2017; and Excludes the impact of exchange.
* Total Abbott sales from continuing operations include Other Sales of $17 million. In 2016, the AMO business, which was divested during the first quarter 2017, was reported as part of the Medical Devices group. Comparable operational growth rates above exclude results from the AMO business.
* In 2017, total Abbott sales from continuing operations include Other Sales of $237 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.
n/a = Not Applicable.
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.
Fourth-quarter 2017 worldwide sales of $7.6 billion increased 42.3 percent on a reported basis. On a comparable operational basis, worldwide sales increased 7.7 percent. Refer to tables titled "Non-GAAP Reconciliation of Comparable Historical Revenue" for a reconciliation of comparable historical revenue.
Worldwide Nutrition sales increased 3.0 percent on a reported basis in the fourth quarter, including a favorable 1.0 percent effect of foreign exchange, and increased 2.0 percent on an operational basis.
Worldwide Pediatric Nutrition sales increased 2.4 percent on a reported basis in the fourth quarter, including a favorable 0.9 percent effect of foreign exchange, and increased 1.5 percent on an operational basis. In the U.S., continued above-market growth was led by Abbott’s market-leading toddler brands, PediaSure and Pedialyte. International sales decreased 0.2 percent on an operational basis, as growth in China and India was offset by continued challenging market conditions in certain other international countries.
Worldwide Adult Nutrition sales increased 3.6 percent on a reported basis in the fourth quarter, including a favorable 0.8 percent effect of foreign exchange, and increased 2.8 percent on an operational basis. Worldwide sales growth was led by Ensure, Abbott’s market-leading complete and balanced nutrition brand, and Glucerna, Abbott’s market-leading diabetes-specific nutrition brand.
* Rapid Diagnostics reflects sales from Alere, Inc., which was acquired on Oct. 3, 2017. Comparable operational growth rates above exclude results from the Rapid Diagnostics business.
Worldwide Diagnostics sales increased 51.7 percent on a reported basis in the fourth quarter. On a comparable operational basis, sales increased 6.7 percent. Refer to tables titled "Non-GAAP Reconciliation of Comparable Historical Revenue" for a reconciliation of comparable historical revenue.
Core Laboratory Diagnostics sales increased 9.4 percent on a reported basis in the fourth quarter, including a favorable 2.2 percent effect of foreign exchange, and increased 7.2 percent on an operational basis, reflecting continued above-market growth driven by share gains globally.
Molecular Diagnostics sales increased 4.2 percent on a reported basis in the fourth quarter, including a favorable 1.8 percent effect of foreign exchange, and increased 2.4 percent on an operational basis. As expected, growth in infectious disease testing, Abbott’s core area of focus in the molecular diagnostics market, was partially offset by a planned scale down in other testing areas, primarily in the U.S.
Point of Care Diagnostics sales increased 7.2 percent on a reported basis in the fourth quarter, including a favorable 0.4 percent effect of foreign exchange, and increased 6.8 percent on an operational basis, led by continued adoption of Abbott’s i-STAT handheld system.
Rapid Diagnostics sales of $540 million were led by infectious disease testing, including flu and strep testing.
Established Pharmaceuticals sales increased 17.0 percent on a reported basis in the fourth quarter, including a favorable 3.0 percent effect of foreign exchange, and increased 14.0 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 geographies increased 15.0 percent on a reported basis in the fourth quarter, including a favorable 2.5 percent effect of foreign exchange, and increased 12.5 percent on an operational basis. Operational sales growth was led by double-digit growth across several geographies, including India, China and Latin America.
Other sales increased 19.6 percent on an operational basis primarily due to the favorable timing of sales in certain countries during the fourth quarter.
Worldwide Medical Devices sales increased 102.2 percent on a reported basis in the fourth quarter. On a comparable operational basis, sales increased 9.6 percent. Refer to tables titled "Non-GAAP Reconciliation of Comparable Historical Revenue" for a reconciliation of comparable historical revenue.
In Cardiovascular and Neuromodulation, worldwide sales in the fourth quarter were led by double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Neuromodulation. In Electrophysiology, during the fourth quarter, Abbott initiated the U.S. launch of its Confirm Rx Insertable Cardiac Monitor (ICM), the world’s first and only smartphone-compatible ICM designed to help physicians remotely identify cardiac arrhythmias. Growth in Structural Heart was driven by MitraClip, Abbott’s market-leading device for the minimally-invasive treatment of mitral regurgitation. In Heart Failure, sales growth was led by market uptake of Abbott’s HeartMate 3 system, which received U.S. FDA approval in the third quarter of 2017. In Neuromodulation, strong double-digit growth was led by several recently launched products for the treatment of chronic pain and movement disorders.
In the fourth quarter, in Rhythm Management, Abbott received U.S. FDA approval for MR-conditional labeling for its Quadra Assura and Quadra Assura MP cardiac resynchronization therapy defibrillator (CRT-D) devices and its Fortify Assura implantable cardioverter defibrillator (ICD). In Vascular, Abbott obtained CE Mark for its XIENCE Sierra drug-eluting coronary stent system, which enhances its competitive position in this category of the market.
In Diabetes Care, worldwide sales increased 33.2 percent on a reported basis in the fourth quarter, including a favorable 5.6 percent effect of foreign exchange, and increased 27.6 percent on an operational basis. Strong double-digit international sales growth was led by FreeStyle Libre, Abbott’s revolutionary CGM system. FreeStyle Libre is the only CGM system available that comes factory-calibrated and removes the need for routine fingersticks3 for people with diabetes. During the fourth quarter, Abbott initiated the U.S. launch of FreeStyle Libre, and in January 2018, Abbott announced that FreeStyle Libre is now available and approved for coverage by CMS.
ABBOTT ISSUES FINANCIAL OUTLOOK FOR 2018
Abbott is issuing full-year 2018 guidance for diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $1.22 to $1.32.
Abbott forecasts net specified items for the full year 2018 of approximately $1.58 per share. Specified items include intangible amortization expense, acquisition-related expenses, charges associated with cost reduction initiatives and other expenses.
Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $2.80 to $2.90 for the full year 2018.
Abbott is issuing first-quarter 2018 guidance for diluted earnings per share from continuing operations under GAAP of $0.16 to $0.18. Abbott forecasts specified items for the first quarter of $0.41 per share primarily related to intangible amortization expense, acquisition-related expenses, cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $0.57 to $0.59.
Abbott has stated its commitment to reduce its debt levels following the recent acquisitions of St. Jude Medical and Alere, Inc. For the full year 2017, Abbott generated operating cash flow in excess of $5.0 billion and free cash flow4 in excess of $4.0 billion. In January 2018, Abbott repaid $4.0 billion of debt and anticipates additional debt repayments throughout 2018.
ABBOTT ANNOUNCES INCREASE IN QUARTERLY DIVIDEND
On Dec. 15, 2017, the board of directors of Abbott increased the company’s quarterly dividend to $0.280 per share from $0.265 per share. Abbott’s cash dividend is payable Feb. 15, 2018, to shareholders of record at the close of business on Jan. 12, 2018. This marks the 376th consecutive quarterly dividend to be paid by Abbott.
Abbott has increased its dividend payout for 46 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.