On January 23, 2019 Abbott reported financial results for the fourth quarter and full year ended Dec. 31, 2018, and issued financial outlook for 2019 (Press release, Abbott, JAN 23, 2019, View Source [SID1234532828]) (Press release, Abbott, JAN 23, 2019, View Source [SID1234532828]).
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· Full-year 2018 worldwide sales of $30.6 billion increased 11.6 percent on a reported basis and 7.3 percent on an organic* basis.
· Reported diluted EPS from continuing operations under GAAP was $1.31 in the full year 2018 and adjusted diluted EPS from continuing operations, which excludes specified items, was $2.88, reflecting 15.2 percent growth1.
· Fourth-quarter worldwide sales of $7.8 billion increased 2.3 percent on a reported basis and 6.4 percent on an organic basis.
·Reported diluted EPS from continuing operations under GAAP was $0.37 in the fourth quarter and adjusted diluted EPS from continuing operations, which excludes specified items, was $0.81.
·Abbott issues full-year 2019 guidance for organic sales growth of 6.5 to 7.5 percent2, which excludes the impact of foreign exchange, and diluted EPS from continuing operations on a GAAP basis of $1.80 to $1.90. Projected full-year adjusted diluted EPS from continuing operations is $3.15 to $3.25, reflecting double-digit growth at the mid-point.
· In 2018, Abbott generated strong operating cash flow and paid down more than $8 billion of debt.
·During 2018, Abbott returned $2 billion to shareholders in the form of dividends and, in December, announced a 14.3 percent increase in its quarterly common dividend.
·In October, Abbott received U.S. FDA approval of its HeartMate 3TM left ventricular assist device as a destination (long-term use) therapy. In January 2019, Abbott announced U.S. FDA approval of its TactiCathTM Contact Force Ablation Catheter, Sensor EnabledTM, a new catheter designed to help physicians accurately and effectively treat atrial fibrillation, a form of irregular heartbeat.
"2018 was another outstanding year for Abbott," said Miles D. White, chairman and chief executive officer, Abbott. "We exceeded the organic sales growth range we set at the beginning of the year, achieved a number of significant advances in our pipeline, and significantly improved our balance sheet and strategic flexibility. We’re very well-positioned heading into 2019."
FOURTH-QUARTER AND FULL-YEAR 2018 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.
For 2018, 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;
· Excludes the prior year fourth quarter results for a non-core business within U.S. Adult Nutrition, which was discontinued during the third quarter 2018; and
· Excludes the impact of foreign exchange.
Total YTD 2018 Abbott sales from continuing operations include Other Sales of $62 million.
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 2018 worldwide sales of $7.8 billion increased 2.3 percent on a reported basis. On an organic basis, worldwide sales increased 6.4 percent. For the full-year 2018, worldwide sales increased 11.6 percent on a reported basis and 7.3 percent on an organic basis. Refer to pages 16 and 17 for a reconciliation of adjusted historical revenue.
Worldwide Nutrition sales decreased 0.4 percent on a reported basis in the fourth quarter. On an organic basis, sales increased 3.6 percent. For the full-year 2018, worldwide sales increased 4.4 percent on a reported basis and 5.2 percent on an organic basis. Refer to pages 16 and 17 for a reconciliation of adjusted historical revenue.
Worldwide Pediatric Nutrition sales increased 1.2 percent on a reported basis in the fourth quarter, including an unfavorable 2.5 percent effect of foreign exchange, and increased 3.7 percent on an organic basis. International pediatric sales decreased 0.8 percent on a reported basis, including an unfavorable 4.5 percent effect of foreign exchange, and increased 3.7 percent on an organic basis. Performance in the quarter was led by above-market growth in the U.S. and strong growth across several markets in Asia and Latin America, including China, Vietnam and Mexico.
Worldwide Adult Nutrition sales decreased 2.5 percent on a reported basis in the fourth quarter, and increased 3.5 percent on an organic basis. International adult sales increased 0.9 percent on a reported basis, including an unfavorable 5.7 percent effect of foreign exchange, and increased 6.6 percent on an organic basis. Worldwide sales performance was led by strong growth of 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. Organic growth rates above exclude results from the Rapid Diagnostics business.
n/a = Percent change is not applicable as organic results exclude Rapid Diagnostics in 2018.
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 2.9 percent on a reported basis in the fourth quarter. On an organic basis, sales increased 7.4 percent. For the full-year 2018, worldwide sales increased 33.5 percent on a reported basis and 6.7 percent on an organic basis. Refer to pages 16 and 17 for a reconciliation of adjusted historical revenue.
Core Laboratory Diagnostics sales increased 5.0 percent on a reported basis in the fourth quarter, including an unfavorable 4.4 percent effect of foreign exchange, and increased 9.4 percent on an organic basis, reflecting above-market growth in the U.S. and internationally, where Abbott is seeing continued strong adoption of Alinity TM, Abbott’s family of innovative and highly differentiated diagnostic instruments.
Molecular Diagnostics sales increased 1.4 percent on a reported basis in the fourth quarter, including an unfavorable 2.4 percent effect of foreign exchange, and increased 3.8 percent on an organic basis. Worldwide sales were led by growth in infectious disease testing, Abbott’s core area of focus in the molecular diagnostics market.
Point of Care Diagnostics sales decreased 5.5 percent on a reported basis in the fourth quarter, including an unfavorable 0.4 percent effect of foreign exchange, and decreased 5.1 percent on an organic basis.
Rapid Diagnostics worldwide sales of $548 million were led by infectious disease and cardiometabolic testing.
Established Pharmaceuticals sales decreased 4.8 percent on a reported basis in the fourth quarter, including an unfavorable 8.4 percent effect of foreign exchange, and increased 3.6 percent on an organic basis. As expected, sales growth in the fourth quarter was negatively impacted by a comparison versus the fourth-quarter of 2017, when organic sales grew 14.0 percent.
Key Emerging Markets include India, Brazil, Russia and China along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these geographies decreased 6.2 percent on a reported basis in the fourth quarter, including an unfavorable 10.5 percent effect of foreign exchange, and increased 4.3 percent on an organic basis. For the full-year 2018, sales in key emerging markets increased 1.7 percent on a reported basis and 7.4 percent on an organic basis led by double-digit growth in India and China.
Other sales increased 0.2 percent on a reported basis in the fourth quarter and 1.3 percent on an organic basis. For the full-year 2018, Other sales increased 8.1 percent on a reported basis and 5.8 percent on an organic basis.
Worldwide Medical Devices sales increased 6.7 percent on a reported basis in the fourth quarter. On an organic basis, sales increased 9.0 percent. For the full-year 2018, worldwide sales increased 10.1 percent on a reported basis and 9.1 percent on an organic basis. Refer to page 17 for a reconciliation of adjusted historical revenue.
In Electrophysiology, growth was led by strong performance in cardiac mapping and ablation catheters. In January 2019, Abbott announced U.S. FDA approval of its TactiCath Contact Force Ablation Catheter, Sensor Enabled, a new catheter designed to help physicians accurately and effectively treat atrial fibrillation.
Growth in Structural Heart was driven by several product areas across Abbott’s broad portfolio, including AMPLATZERTM PFO Occluder, a device designed to close a hole-like opening in the heart, and MitraClip, Abbott’s market-leading device for the minimally invasive treatment of mitral regurgitation, a leaky heart valve.
In Diabetes Care, sales increased 28.3 percent on a reported basis and 32.4 percent on an organic basis in the fourth quarter, led by rapid market uptake of FreeStyle Libre, Abbott’s revolutionary sensor-based continuous glucose monitoring system, which removes the need for routine fingersticks3 for people with diabetes.
ABBOTT ISSUES GUIDANCE FOR 2019
Abbott is issuing full-year 2019 guidance for organic sales growth of 6.5 to 7.5 percent2, which excludes the impact of foreign exchange, and diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $1.80 to $1.90. Abbott forecasts net specified items for the full year 2019 of $1.35 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 $3.15 to $3.25 for the full year 2019.
Abbott is issuing first-quarter 2019 guidance for diluted earnings per share from continuing operations under GAAP of $0.25 to $0.27. Abbott forecasts specified items for the first quarter 2019 of $0.35 per share 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 $0.60 to $0.62 for the first quarter.
ABBOTT ANNOUNCES INCREASE IN QUARTERLY DIVIDEND
Dec. 14, 2018, the board of directors of Abbott increased the company’s quarterly dividend to $0.32 per share from $0.28 per share, an increase of 14.3 percent. Abbott’s cash dividend is payable Feb. 15, 2019, to shareholders of record at the close of business on Jan. 15, 2019. This marks the 380th consecutive quarterly dividend to be paid by Abbott.
Abbott has increased its dividend payout for 47 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.