On January 25, 2023 Abbott (NYSE: ABT) reported financial results for the fourth quarter ended Dec. 31, 2022 (Press release, Abbott, JAN 25, 2023, View Source [SID1234626529]).
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Fourth-quarter sales of $10.1 billion, which were negatively impacted by an expected year-over-year decline in COVID-19 testing-related sales, decreased 12.0 percent on a reported basis and 6.1 percent on an organic basis, which excludes the impact of foreign exchange.
Excluding COVID-19 testing-related sales1, fourth-quarter sales decreased 1.4 percent on a reported basis and increased 5.4 percent on an organic basis.
Excluding COVID-19 testing-related sales2 and U.S. infant formula sales that were impacted by manufacturing disruptions3, full-year 2022 sales increased 1.9 percent on a reported basis and 7.4 percent on an organic basis.
GAAP diluted EPS was $0.59 in the fourth quarter. Excluding specified items, adjusted diluted EPS was $1.03.
Abbott issues full-year 2023 guidance for diluted EPS from continuing operations on a GAAP basis of $3.05 to $3.25 and full-year adjusted EPS from continuing operations of $4.30 to $4.50.
Abbott projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, of high-single digits4 and COVID-19 testing-related sales of around $2.0 billion.
In October, Abbott’s market-leading FreeStyle Libre continuous glucose monitoring system was named the "Best Medical Technology" of the last 50 years by the Galien Foundation.
In December, Abbott announced U.S. Food and Drug Administration (FDA) approval of its Eterna spinal cord stimulation system — the smallest implantable, rechargeable system currently available for the treatment of chronic pain.5
In January, Abbott announced U.S. FDA approval of its minimally invasive Navitor transcatheter aortic valve implantation (TAVI) system for people with severe aortic stenosis who are at high risk for surgery.
"We significantly exceeded the EPS guidance we provided at the beginning of last year despite challenging global business conditions," said Robert B. Ford, chairman and chief executive officer, Abbott. "Our R&D pipeline continues to be highly productive with several recent and upcoming new product launches that position us well going forward."
FOURTH-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business. Organic sales growth excludes the impact of foreign exchange. In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates. Management further believes that measuring sales growth rates on an organic basis excluding COVID-19 tests is an appropriate way for investors to best understand the underlying performance of the business in the fourth quarter ended Dec. 31, 2022 as well as in 2023 as the COVID-19 pandemic shifts to an endemic state, resulting in significantly lower expected demand for COVID-19 tests.
Total Company
($ in millions)
% Change vs. 4Q21
Sales 4Q22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total 6
4,219
5,872
10,091
(13.1)
(11.2)
(12.0)
(13.1)
(0.9)
(6.1)
Nutrition
795
1,022
1,817
(14.4)
(8.3)
(11.1)
(14.4)
1.4
(5.7)
Diagnostics
1,695
1,610
3,305
(29.0)
(22.8)
(26.1)
(29.0)
(12.5)
(21.3)
Established Pharmaceuticals
—
1,216
1,216
n/a
1.0
1.0
n/a
7.9
7.9
Medical Devices
1,726
2,024
3,750
12.2
(8.4)
—
12.2
4.1
7.4
% Change vs. 12M21
Sales 12M22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total 6
18,142
25,511
43,653
9.0
(3.5)
1.3
9.0
4.7
6.4
Nutrition
2,919
4,540
7,459
(17.9)
(4.2)
(10.1)
(17.9)
2.5
(6.2)
Diagnostics
8,646
7,938
16,584
21.3
(6.8)
6.0
21.3
1.3
10.4
Established Pharmaceuticals
—
4,912
4,912
n/a
4.1
4.1
n/a
10.6
10.6
Medical Devices
6,566
8,121
14,687
10.9
(3.8)
2.2
10.9
6.2
8.1
n/a = Not Applicable.
Worldwide COVID-19 testing-related sales were $1.069 billion in the fourth quarter of 2022 compared to $2.319 billion in the fourth quarter of the prior year. Worldwide COVID-19 testing-related sales were $8.368 billion in the full year of 2022 compared to $7.679 billion in the prior year.
The following tables summarize sales excluding COVID-19 testing-related sales and the change in reported and organic sales excluding COVID-19 testing-related sales in 2022 versus the prior year2:
% Change vs. 4Q21
Sales excl. COVID tests 4Q22
Reported excl. COVID tests
Organic excl. COVID tests
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total 1
3,443
5,579
9,022
5.8
(5.4)
(1.4)
5.8
5.3
5.4
Diagnostics
919
1,317
2,236
16.8
(3.6)
3.8
16.8
8.0
11.2
% Change vs. 12M21
Sales excl. COVID tests 12M22
Reported excl. COVID tests
Organic excl. COVID tests
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
12,644
22,641
35,285
2.5
(1.8)
(0.3)
2.5
6.5
5.1
Diagnostics
3,148
5,068
8,216
11.4
(1.4)
3.1
11.4
7.1
8.6
Nutrition
($ in millions)
% Change vs. 4Q21
Sales 4Q22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
795
1,022
1,817
(14.4)
(8.3)
(11.1)
(14.4)
1.4
(5.7)
Pediatric
454
428
882
(20.4)
(8.9)
(15.2)
(20.4)
(1.2)
(11.8)
Adult
341
594
935
(4.8)
(7.9)
(6.8)
(4.8)
3.4
0.5
% Change vs. 12M21
Sales 12M22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
2,919
4,540
7,459
(17.9)
(4.2)
(10.1)
(17.9)
2.5
(6.2)
Pediatric
1,562
1,919
3,481
(28.7)
(8.9)
(19.0)
(28.7)
(3.9)
(16.6)
Adult
1,357
2,621
3,978
(0.5)
(0.4)
(0.4)
(0.5)
7.6
4.8
Worldwide Nutrition sales decreased 11.1 percent on a reported basis and 5.7 percent on an organic basis in the fourth quarter. Total worldwide Nutrition and Pediatric Nutrition sales were negatively impacted as a result of manufacturing disruptions during 2022 of certain infant formula products3 at Abbott’s Sturgis, Michigan, facility. The manufacturing facility has subsequently restarted production.
In Adult Nutrition, global sales decreased 6.8 percent on a reported basis and increased 0.5 percent on an organic basis in the fourth quarter, led by Ensure, Abbott’s market-leading complete and balanced nutrition brand.
Diagnostics
($ in millions)
% Change vs. 4Q21
Sales 4Q22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
1,695
1,610
3,305
(29.0)
(22.8)
(26.1)
(29.0)
(12.5)
(21.3)
Core Laboratory
301
963
1,264
0.2
(8.1)
(6.3)
0.2
3.5
2.8
Molecular
62
118
180
(54.2)
(43.9)
(47.9)
(54.2)
(38.6)
(44.7)
Point of Care
88
43
131
(7.6)
7.0
(3.3)
(7.6)
14.4
(1.2)
Rapid Diagnostics
1,244
486
1,730
(33.0)
(38.2)
(34.5)
(33.0)
(28.3)
(31.6)
% Change vs. 12M21
Sales 12M22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
8,646
7,938
16,584
21.3
(6.8)
6.0
21.3
1.3
10.4
Core Laboratory
1,137
3,751
4,888
(0.7)
(5.8)
(4.7)
(0.7)
2.7
1.9
Molecular
370
625
995
(34.6)
(27.4)
(30.3)
(34.6)
(22.6)
(27.4)
Point of Care
372
153
525
(3.2)
0.8
(2.1)
(3.2)
6.0
(0.6)
Rapid Diagnostics
6,767
3,409
10,176
34.4
(3.1)
19.0
34.4
5.4
22.5
As expected, Diagnostics sales in the fourth quarter were negatively impacted by year-over-year declines in COVID-19 testing-related sales. Worldwide COVID-19 testing-related sales were $1.069 billion in the fourth quarter of 2022 compared to $2.319 billion in the fourth quarter of the prior year.
The following tables summarize sales excluding COVID-19 testing-related sales and the change in reported and organic sales excluding COVID-19 testing-related sales in 2022 versus the prior year2:
% Change vs. 4Q21
Sales excl. COVID tests 4Q22
Reported excl. COVID tests
Organic excl. COVID tests
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
919
1,317
2,236
16.8
(3.6)
3.8
16.8
8.0
11.2
Core Laboratory
298
956
1,254
1.5
(5.3)
(3.8)
1.5
6.8
5.6
Molecular
45
98
143
(0.2)
(8.3)
(5.9)
(0.2)
(0.4)
(0.3)
Point of Care
88
43
131
(7.6)
7.0
(3.3)
(7.6)
14.4
(1.2)
Rapid Diagnostics
488
220
708
38.3
4.6
25.7
38.3
16.8
30.3
% Change vs. 12M21
Sales excl. COVID tests 12M22
Reported excl. COVID tests
Organic excl. COVID tests
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
3,148
5,068
8,216
11.4
(1.4)
3.1
11.4
7.1
8.6
Core Laboratory
1,121
3,705
4,826
1.3
(2.9)
(2.0)
1.3
5.8
4.8
Molecular
180
404
584
11.4
8.0
9.0
11.4
14.8
13.8
Point of Care
372
153
525
(3.2)
0.8
(2.1)
(3.2)
6.0
(0.6)
Rapid Diagnostics
1,475
806
2,281
25.6
1.3
15.8
25.6
9.4
19.1
Established Pharmaceuticals
($ in millions)
% Change vs. 4Q21
Sales 4Q22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
—
1,216
1,216
n/a
1.0
1.0
n/a
7.9
7.9
Key Emerging Markets
—
902
902
n/a
3.9
3.9
n/a
10.3
10.3
Other
—
314
314
n/a
(6.5)
(6.5)
n/a
1.9
1.9
% Change vs. 12M21
Sales 12M22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
—
4,912
4,912
n/a
4.1
4.1
n/a
10.6
10.6
Key Emerging Markets
—
3,728
3,728
n/a
5.4
5.4
n/a
11.8
11.8
Other
—
1,184
1,184
n/a
0.4
0.4
n/a
7.3
7.3
Established Pharmaceuticals sales increased 1.0 percent on a reported basis and 7.9 percent on an organic basis in the fourth 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 3.9 percent on a reported basis and 10.3 percent on an organic basis, led by strong growth in several geographies including India, China, Brazil and Mexico, and across several therapeutic areas, including cardiometabolic, women’s health and central nervous system/pain management.
Medical Devices
($ in millions)
% Change vs. 4Q21
Sales 4Q22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
1,726
2,024
3,750
12.2
(8.4)
—
12.2
4.1
7.4
Rhythm Management
254
260
514
5.2
(13.3)
(5.0)
5.2
(0.5)
2.1
Electrophysiology
242
245
487
22.7
(19.8)
(3.1)
22.7
(6.6)
4.9
Heart Failure
171
59
230
0.1
(13.9)
(3.9)
0.1
(4.5)
(1.2)
Vascular
214
391
605
(7.5)
(12.5)
(10.8)
(7.5)
(1.4)
(3.5)
Structural Heart
214
227
441
10.9
0.4
5.2
10.9
15.7
13.5
Neuromodulation
163
39
202
3.7
(3.1)
2.3
3.7
11.7
5.3
Diabetes Care
468
803
1,271
34.9
(2.5)
8.6
34.9
9.8
17.3
% Change vs. 12M21
Sales 12M22
Reported
Organic
U.S.
Int’l
Total
U.S.
Int’l
Total
U.S.
Int’l
Total
Total
6,566
8,121
14,687
10.9
(3.8)
2.2
10.9
6.2
8.1
Rhythm Management
1,029
1,090
2,119
1.1
(7.7)
(3.6)
1.1
1.9
1.5
Electrophysiology
909
1,018
1,927
17.0
(9.9)
1.1
17.0
0.7
7.3
Heart Failure
694
226
920
6.2
(4.0)
3.5
6.2
5.2
5.9
Vascular
864
1,619
2,483
(5.6)
(6.9)
(6.4)
(5.6)
1.5
(1.0)
Structural Heart
818
894
1,712
12.0
1.6
6.3
12.0
13.8
13.0
Neuromodulation
619
151
770
0.3
(8.1)
(1.4)
0.3
2.9
0.9
Diabetes Care
1,633
3,123
4,756
34.8
0.2
9.9
34.8
10.6
17.4
Worldwide Medical Devices sales were flat on a reported basis and increased 7.4 percent on an organic basis in the fourth quarter. Sales growth in the U.S. was led by strong double-digit growth in Electrophysiology, Structural Heart and Diabetes Care. Internationally, sales growth was negatively impacted by intermittent COVID-19 lockdown restrictions in China as well as supply constraints in certain areas, including Electrophysiology and Diabetes Care.
In Diabetes Care, FreeStyle Libre sales were approximately $1.1 billion in the quarter, including U.S. growth of more than 40 percent.
In 2022, Abbott continued to strengthen its Medical Devices portfolio with several recent pipeline advancements, including U.S. FDA approvals of:
Navitor, Abbott’s latest-generation transcatheter aortic valve implantation (TAVI) system, used for the treatment of severe aortic stenosis.
Eterna, Abbott’s rechargeable spinal cord stimulator used for treating chronic pain.
Aveir leadless pacemaker, used for treating patients with slow heart rhythms.
An expanded indication of use for CardioMEMS HF remote monitoring system, which detects early warning signs of worsening heart failure.
U.S. FDA clearance of the FreeStyle Libre 3 system, which provides continuous glucose readings and unsurpassed 14-day accuracy7 in the world’s smallest and thinnest7 wearable sensor.
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 396TH CONSECUTIVE QUARTERLY DIVIDEND
On Dec. 9, 2022, the board of directors of Abbott declared the company’s quarterly dividend of $0.51 per share. Abbott’s cash dividend is payable Feb. 15, 2023, to shareholders of record at the close of business on Jan. 13, 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.