On April 18, 2018 Abbott (NYSE: ABT) reported financial results for the first quarter ended March 31, 2018 (Press release, Abbott, APR 18, 2018, View Source [SID1234525493]).
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First-quarter worldwide sales of $7.4 billion increased 16.7 percent on a reported basis and 6.9 percent on an organic* basis.
Reported diluted EPS from continuing operations under GAAP was $0.23 in the first quarter.
Adjusted diluted EPS from continuing operations, which excludes specified items, was $0.59, at the upper end of Abbott’s previous guidance range.
Abbott projects full-year 2018 diluted EPS from continuing operations of $1.23 to $1.33 on a GAAP basis1. Projected full-year adjusted diluted EPS from continuing operations remains $2.80 to $2.90, reflecting 14.0 percent growth at the midpoint.
In January, Abbott announced U.S. FDA approval for magnetic resonance (MR)-conditional labeling for its Quadra AssuraTM and Quadra Assura MPTM cardiac resynchronization therapy defibrillator (CRT-D) devices and its Fortify AssuraTM implantable cardioverter defibrillator (ICD). With these approvals, Abbott has MR-conditional labeling for its suite of pacemaker, ICD and CRT-D devices.
In January, Abbott announced that FreeStyle Libre, Abbott’s revolutionary sensor-based continuous glucose monitoring system, is now available and approved for coverage by the U.S. Center for Medicare and Medicaid Services.
In March, Abbott announced clinical trial data from the MOMENTUM 3 study, which demonstrated that its HeartMate 3TM left ventricular assist device (LVAD) improved survival and clinical outcomes at two years for patients with advanced heart failure. The trial data will be submitted to the U.S. FDA to support consideration to expand the current HeartMate 3 indication to include long-term use.
"We’re off to a strong start to the year as we forecasted," said Miles D. White, chairman and chief executive officer, Abbott. "We’re particularly pleased with the continued strong growth in Medical Devices and improving performance in our Nutrition business."
* See note on organic growth below.
FIRST-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business.
Organic sales growth:
Excludes prior 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 and prior year results for Rapid Diagnostics, which reflect results for Alere Inc., which was acquired on Oct. 3, 2017; and
Excludes the impact of foreign exchange.
Following are sales by business segment and commentary for the first quarter:
Total Company
($ in millions)
% Change vs. 1Q17
Sales 1Q18
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total *
2,675
4,715
7,390
15.1
17.6
16.7
5.0
8.0
6.9
Nutrition
758
998
1,756
3.8
9.5
7.0
3.8
5.5
4.7
Diagnostics
700
1,137
1,837
89.2
44.3
58.7
1.8
7.3
5.5
Established Pharmaceuticals
—
1,044
1,044
n/a
9.9
9.9
n/a
6.8
6.8
Medical Devices
1,209
1,535
2,744
6.4
22.0
14.6
6.9
11.7
9.4
* Total 2018 Abbott sales from continuing operations include Other Sales of $9 million.
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.
First-quarter 2018 worldwide sales of $7.4 billion increased 16.7 percent on a reported basis. On an organic basis, worldwide sales increased 6.9 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.
Nutrition
($ in millions)
% Change vs. 1Q17
Sales 1Q18
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
758
998
1,756
3.8
9.5
7.0
3.8
5.5
4.7
Pediatric
448
546
994
3.7
10.5
7.3
3.7
6.3
5.1
Adult
310
452
762
4.0
8.4
6.6
4.0
4.4
4.3
Worldwide Nutrition sales increased 7.0 percent on a reported basis in the first quarter, including a favorable 2.3 percent effect of foreign exchange, and increased 4.7 percent on an organic basis.
Worldwide Pediatric Nutrition sales increased 7.3 percent on a reported basis in the first quarter, including a favorable 2.2 percent effect of foreign exchange, and increased 5.1 percent on an organic basis. International sales increased 10.5 percent on a reported basis, including a favorable 4.2 percent effect of foreign exchange, and increased 6.3 percent on an organic basis, which was led by strong growth across several countries in Asia, including Greater China. In the U.S., continued above-market growth was led by market share gains in the infant nutrition category.
Worldwide Adult Nutrition sales increased 6.6 percent on a reported basis in the first quarter, including a favorable 2.3 percent effect of foreign exchange, and increased 4.3 percent on an organic 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.
Diagnostics
($ in millions)
% Change vs. 1Q17
Sales 1Q18
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total *
700
1,137
1,837
89.2
44.3
58.7
1.8
7.3
5.5
Core Laboratory
228
791
1,019
5.6
13.8
11.9
5.6
6.5
6.3
Molecular
39
79
118
(13.8)
17.5
5.0
(13.8)
11.4
1.3
Point of Care
110
31
141
0.6
23.0
4.8
0.6
18.6
4.0
Rapid Diagnostics *
323
236
559
n/m
n/m
n/m
n/m
n/m
n/m
* Rapid Diagnostics reflects sales from Alere Inc., which was acquired on Oct. 3, 2017. Organic growth rates above exclude results from the Rapid Diagnostics business.
n/m = Percent change is not meaningful.
Worldwide Diagnostics sales increased 58.7 percent on a reported basis in the first quarter. On an organic basis, sales increased 5.5 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.
Core Laboratory Diagnostics sales increased 11.9 percent on a reported basis in the first quarter, including a favorable 5.6 percent effect of foreign exchange, and increased 6.3 percent on an organic basis, reflecting continued above-market growth driven by share gains in the U.S. and internationally.
Molecular Diagnostics sales increased 5.0 percent on a reported basis in the first quarter, including a favorable 3.7 percent effect of foreign exchange, and increased 1.3 percent on an organic basis. As expected, strong 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 4.8 percent on a reported basis in the first quarter, including a favorable 0.8 percent effect of foreign exchange, and increased 4.0 percent on an organic basis, led by strong international growth of Abbott’s i-STAT handheld system.
Rapid Diagnostics worldwide sales of $559 million were led by infectious disease testing, including strong flu and strep testing volumes in the U.S.
Established Pharmaceuticals
($ in millions)
% Change vs. 1Q17
Sales 1Q18
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
—
1,044
1,044
n/a
9.9
9.9
n/a
6.8
6.8
Key Emerging Markets
—
793
793
n/a
8.7
8.7
n/a
6.8
6.8
Other
—
251
251
n/a
13.9
13.9
n/a
6.6
6.6
Established Pharmaceuticals sales increased 9.9 percent on a reported basis in the first quarter, including a favorable 3.1 percent effect of foreign exchange, and increased 6.8 percent on an organic 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 8.7 percent on a reported basis in the first quarter, including a favorable 1.9 percent effect of foreign exchange, and increased 6.8 percent on an organic basis. Sales growth was led by double-digit growth across several geographies, including India, China and Brazil.
Medical Device
Worldwide Medical Devices sales increased 14.6 percent on a reported basis in the first quarter. On an organic basis, sales increased 9.4 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.
In Cardiovascular and Neuromodulation, worldwide sales growth in the first quarter was led by double-digit growth in Electrophysiology and Neuromodulation. Growth in Electrophysiology includes share gains from the recent U.S. launch of Abbott’s Confirm RxTM Insertable Cardiac Monitor (ICM), the world’s first and only smartphone-compatible ICM designed to help physicians remotely identify cardiac arrhythmias. In Heart Failure, sales growth was led by market uptake of Abbott’s HeartMate 3 system. In the quarter, Abbott announced clinical trial data from the MOMENTUM 3 study demonstrating that its HeartMate 3 LVAD improved survival and clinical outcomes at 2 years for patients with advanced heart failure. The trial data will be submitted to the U.S. FDA to support consideration to expand the current HeartMate 3 indication to include long-term use. Growth in Structural Heart was driven by MitraClip, Abbott’s market-leading device for the minimally-invasive treatment of mitral regurgitation. In March, Abbott announced MitraClip was granted national reimbursement in Japan, which enables greater access for patients to this life-altering therapy. In Neuromodulation, strong double-digit growth was led by a portfolio of recently launched products for the treatment of chronic pain and movement disorders.
In Diabetes Care, worldwide sales increased 44.2 percent on a reported basis in the first quarter, including a favorable 11.3 percent effect of foreign exchange, and increased 32.9 percent on an organic basis. Strong double-digit growth was led by FreeStyle Libre, Abbott’s revolutionary sensor-based continuous glucose monitoring (CGM) system, which removes the need for routine fingersticks2 for people with diabetes. During the quarter, Abbott announced that the FreeStyle LibreLink3,4 app is available in Europe for use with compatible smartphones, which allows people to access glucose data directly from their phones and eliminates the need to carry a separate scanning device.
ABBOTT’S FULL-YEAR EARNINGS-PER-SHARE GUIDANCE
Abbott projects 2018 diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $1.23 to $1.33.
Abbott forecasts net specified items for the full year 2018 of approximately $1.57 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 second-quarter 2018 guidance for diluted earnings per share from continuing operations under GAAP of $0.33 to $0.35. Abbott forecasts specified items for the second quarter 2018 of $0.37 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 $0.70 to $0.72 for the second quarter.
ABBOTT DECLARES 377TH CONSECUTIVE QUARTERLY DIVIDEND
On Feb. 16, 2018, the board of directors of Abbott declared the company’s quarterly dividend of $0.28 per share. Abbott’s cash dividend is payable May 15, 2018, to shareholders of record at the close of business on April 13, 2018.
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.