On April 20, 2016 Abbott (NYSE: ABT) reported financial results for the first quarter ended March 31, 2016 (Press release, Abbott, APR 20, 2016, View Source [SID:1234511137]).
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Abbott 2016 Q1 Performance at-a glance
Adjusted diluted EPS from continuing operations, which excludes specified items, was $0.41 in the first quarter, above Abbott’s previous guidance range. Reported diluted EPS from continuing operations under GAAP was $0.04 in the first quarter.
First-quarter worldwide sales of $4.9 billion increased 5.1 percent on an operational basis and decreased 0.2 percent on a reported basis.
Abbott is raising its full-year 2016 adjusted EPS guidance range for continuing operations to $2.14 to $2.24 from $2.10 to $2.20. Projected full-year 2016 EPS for continuing operations under GAAP is $1.36 to $1.46.
Abbott’s recent innovations and product launches contributed to sales growth in the first quarter. Select recently launched products include ElevaTM in the premium segment of the Chinese infant formula market; Abbott’s portfolio of infant and toddler non-GMO nutrition products in the U.S.; MitraClip, Abbott’s structural heart product for the treatment of mitral regurgitation; Freestyle Libre in Europe; Supera peripheral stent in the U.S. for treatment of blockages in the superficial femoral artery; and Abbott’s portfolio of TECNIS intraocular lenses for the treatment of cataracts.
In the first quarter, Abbott received European approval for use in children and teens of its revolutionary FreeStyle Libre Flash Glucose Monitoring System that eliminates routine finger sticks and finger-stick calibration. In Abbott Vascular, AbsorbTM, Abbott’s fully dissolving vascular stent, earned a positive review from an independent U.S. Food and Drug Administration advisory committee.
"We’re off to a good start to the year and are raising our full-year adjusted EPS guidance range," said Miles D. White, chairman and chief executive officer, Abbott. "All four of our businesses met or exceeded our growth expectations and underlying demand remains strong."
FIRST-QUARTER BUSINESS OVERVIEW
Following are sales by business segment and commentary for the first quarter:
Total Company
($ in millions)
% Change vs. 1Q15
Sales 1Q16
Int’l
Total
U.S.
Int’l
Total
U.S.
Operational
Reported
Operational
Reported
Total *
1,531
3,354
4,885
1.9
6.6
(1.2)
5.1
(0.2)
Nutrition
719
952
1,671
4.9
3.9
(3.2)
4.3
0.1
Diagnostics
339
779
1,118
3.7
8.2
1.8
6.9
2.3
Established Pharmaceuticals
—
888
888
n/a
11.0
(1.0)
11.0
(1.0)
Medical Devices
466
731
1,197
(3.9)
3.5
(1.3)
0.5
(2.4)
Note: Operational growth reflects percentage change over the prior year excluding the impact of exchange rates.
* Total Abbott Sales from continuing operations include Other Sales of $11 million.
n/a = Not Applicable.
First-quarter 2016 worldwide sales of $4.9 billion increased 5.1 percent on an operational basis and decreased 0.2 percent on a reported basis, including an unfavorable 5.3 percent effect of foreign exchange.
U.S. sales increased 1.9 percent, led by 9.2 percent growth in Point of Care Diagnostics, 7.5 percent growth in Medical Optics, and 4.9 percent growth in Nutrition.
International sales increased 6.6 percent on an operational basis and decreased 1.2 percent on a reported basis in the first quarter. International operational sales growth was led by 11.0 percent growth in Established Pharmaceuticals, 11.0 percent growth in Diabetes Care and 8.2 percent growth in Diagnostics.
Nutrition
($ in millions)
% Change vs. 1Q15
Sales 1Q16
Int’l
Total
U.S.
Int’l
Total
U.S.
Operational
Reported
Operational
Reported
Total
719
952
1,671
4.9
3.9
(3.2)
4.3
0.1
Pediatric
403
564
967
4.7
4.1
(2.3)
4.4
0.5
Adult
316
388
704
5.2
3.6
(4.6)
4.3
(0.5)
Worldwide Nutrition sales increased 4.3 percent in the first quarter on an operational basis and 0.1 percent on a reported basis, including an unfavorable 4.2 percent effect of foreign exchange.
Worldwide Pediatric Nutrition sales increased 4.4 percent on an operational basis and 0.5 percent on a reported basis in the quarter, including an unfavorable 3.9 percent effect of foreign exchange. In the U.S., above-market sales growth was led by recently launched infant and toddler non-GMO products, including Similac Advance Non-GMO and Go & Grow by Similac Non-GMO. International growth was led by market share expansion of Eleva in the premium segment of the Chinese infant formula market, as well as continued strong performance in Russia and across several countries in Latin America.
Worldwide Adult Nutrition sales increased 4.3 percent on an operational basis and decreased 0.5 percent on a reported basis in the quarter, including an unfavorable 4.8 percent effect of foreign exchange. International Adult Nutrition growth was led by continued strong growth of Ensure and Glucerna in Latin America and other priority geographies. U.S. Adult Nutrition sales growth of 5.2 percent was led by growth of Ensure in the retail and institutional market segments. During the quarter, Abbott launched Ensure Enlive, a nutrition drink that helps adults rebuild lost muscle and regain strength and energy.
Diagnostics
($ in millions)
% Change vs. 1Q15
Sales 1Q16
Int’l
Total
U.S.
Int’l
Total
U.S.
Operational
Reported
Operational
Reported
Total
339
779
1,118
3.7
8.2
1.8
6.9
2.3
Core Laboratory
190
695
885
2.4
8.6
2.1
7.3
2.1
Molecular
47
61
108
(2.1)
3.2
(3.4)
1.0
(2.8)
Point of Care
102
23
125
9.2
9.6
7.2
9.3
8.8
Worldwide Diagnostics sales increased 6.9 percent in the first quarter on an operational basis, driven by continued above-market growth globally, including strong growth in both emerging and developed markets. Sales increased 2.3 percent on a reported basis, including an unfavorable 4.6 percent effect of foreign exchange.
Core Laboratory Diagnostics sales increased 7.3 percent in the quarter on an operational basis and 2.1 percent on a reported basis, including an unfavorable 5.2 percent effect of foreign exchange. Operational sales growth in the quarter was driven by double-digit growth in emerging markets.
Molecular Diagnostics sales increased 1.0 percent in the quarter on an operational basis and decreased 2.8 percent on a reported basis, including an unfavorable 3.8 percent effect of foreign exchange. Strong operational sales growth in Abbott’s infectious disease testing business was offset, as expected, by the planned scale down of its genetics business.
Point of Care Diagnostics sales increased 9.3 percent in the quarter on an operational basis and 8.8 percent on a reported basis, including an unfavorable 0.5 percent effect of foreign exchange. Sales growth was led by continued adoption of Abbott’s i-STAT handheld system in the U.S. and international markets.
Established Pharmaceuticals
($ in millions)
% Change vs. 1Q15
Sales 1Q16
Int’l
Total
U.S.
Int’l
Total
U.S.
Operational
Reported
Operational
Reported
Total
—
888
888
n/a
11.0
(1.0)
11.0
(1.0)
Key Emerging Markets
—
634
634
n/a
11.9
(3.2)
11.9
(3.2)
Other
—
254
254
n/a
8.6
4.9
8.6
4.9
Established Pharmaceuticals sales increased 11.0 percent in the first quarter on an operational basis and decreased 1.0 percent on a reported basis, including an unfavorable 12.0 percent effect of foreign exchange.
Key Emerging Markets include India, Russia, Brazil and China, along with several additional emerging markets that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these key geographies increased 11.9 percent on an operational basis and decreased 3.2 percent on a reported basis, including an unfavorable 15.1 percent effect of foreign exchange.
Operational sales growth in Key Emerging Markets was led by continued double-digit growth in India, which comprises more than 20 percent of Abbott’s Established Pharmaceuticals sales. Sales growth in India was led by double-digit growth across several core therapeutic areas, including women’s health, gastroenterology, and cardio-metabolics. During the quarter, Abbott also achieved above-market growth in China and several countries in Latin America as it continues to expand its presence and portfolio in these key geographies.
Medical Devices
($ in millions)
% Change vs. 1Q15
Sales 1Q16
Int’l
Total
U.S.
Int’l
Total
U.S.
Operational
Reported
Operational
Reported
Total
466
731
1,197
(3.9)
3.5
(1.3)
0.5
(2.4)
Vascular
289
396
685
1.9
0.2
(4.5)
0.9
(1.9)
Diabetes Care
69
174
243
(31.6)
11.0
4.8
(5.2)
(9.1)
Medical Optics
108
161
269
7.5
4.2
0.5
5.4
3.2
Vascular Product Lines:
Coronary Devicesa)
194
336
530
4.9
(1.1)
(5.6)
0.9
(2.0)
Endovascularb)
73
60
133
9.5
8.6
2.9
9.0
6.4
a) Includes DES / BVS product portfolio, structural heart, guidewires, balloon catheters, and other coronary products.
b) Includes vessel closure, carotid stents and other peripheral products.
Worldwide Medical Devices sales increased 0.5 percent in the first quarter on an operational basis and decreased 2.4 percent on a reported basis, including an unfavorable 2.9 percent effect of foreign exchange.
Worldwide sales of Vascular products increased 0.9 percent in the quarter on an operational basis and decreased 1.9 percent on a reported basis, including an unfavorable 2.8 percent effect of foreign exchange. Sales of MitraClip, Abbott’s device for the treatment of mitral regurgitation, increased double-digits globally, as Abbott continues to build the market for this first-in-class device. Growth in Abbott’s Endovascular business was driven by vessel closure products and Supera, Abbott’s peripheral stent for the treatment of blockages in the superficial femoral artery and proximal popliteal artery in the upper leg. In March, Absorb, Abbott’s fully dissolving vascular stent, received a positive review from an independent U.S. FDA advisory committee.
Worldwide Diabetes Care sales decreased 5.2 percent in the quarter on an operational basis and 9.1 percent on a reported basis, including an unfavorable 3.9 percent effect of foreign exchange. Strong international sales growth was driven by continued consumer uptake of FreeStyle Libre, Abbott’s revolutionary Flash Glucose Monitoring System that eliminates routine finger sticks and finger-stick calibration. During the quarter, Abbott received European approval for use of FreeStyle Libre in children and teens. In the U.S., sales were impacted by competitive and market dynamics.
Worldwide Medical Optics sales increased 5.4 percent in the quarter on an operational basis and 3.2 percent on a reported basis, including an unfavorable 2.2 percent effect of foreign exchange. Operational sales growth was driven by continued market uptake of cataract products in the premium intraocular lens segment, including TECNIS Symfony and TECNIS Toric lenses.
ABBOTT RAISES FULL-YEAR ADJUSTED EARNINGS-PER-SHARE GUIDANCE RANGE
Abbott is raising its full-year 2016 guidance range for earnings per share from continuing operations, excluding specified items, to $2.14 to $2.24 from $2.10 to $2.20.
Abbott forecasts net specified items for the full year 2016 of approximately $0.78 per share. Specified items include intangible amortization expense, the impact of the Venezuelan currency devaluation, and charges associated with cost reduction initiatives and deal and other expenses, partially offset by the favorable resolution of various tax positions from prior years.
Including net specified items, projected earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) would be $1.36 to $1.46 for the full year 2016.
ABBOTT DECLARES 369TH QUARTERLY DIVIDEND
On Feb. 19, 2016, the board of directors of Abbott declared the company’s quarterly dividend of $0.26 per share. Abbott’s cash dividend is payable May 16, 2016, to shareholders of record at the close of business on April 15, 2016. This marks the 369th consecutive quarterly dividend paid by Abbott.
Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for 25 consecutive years.