Abbott Reports Fourth-Quarter 2019 Results; Announces Strong Forecast for 2020
ABBOTT PARK, Ill., Jan. 22, 2020 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the fourth quarter and full year ended Dec. 31, 2019.
-- Fourth-quarter worldwide sales of $8.3 billion increased 7.1 percent on
a reported basis and 8.5 percent on an organic* basis.
-- Reported diluted EPS from continuing operations under GAAP was $0.59 in
the fourth quarter. Adjusted diluted EPS from continuing operations,
which excludes specified items, was $0.95, an increase of 17.3 percent
versus prior year(1).
-- Abbott issues full-year 2020 guidance for organic sales growth of 7.0 to
8.0 percent(2), which excludes the impact of foreign exchange, and
diluted EPS from continuing operations on a GAAP basis of $2.35 to
$2.45. Projected full-year adjusted diluted EPS from continuing
operations is $3.55 to $3.65, reflecting double-digit growth at the
mid-point.
-- Medical Devices sales increased 9.7 percent on a reported basis and 11.3
percent on an organic basis in the fourth quarter. Sales performance was
led by double-digit organic sales growth in Heart Failure,
Electrophysiology, Structural Heart and Diabetes Care.
-- Established Pharmaceuticals sales increased 7.8 percent on a reported
basis and 10.0 percent on an organic basis in the fourth quarter. Sales
performance was led by growth across several countries in Latin America
and Asia.
-- Core Laboratory Diagnostics sales increased 8.4 percent on a reported
basis and 10.0 percent on an organic basis in the fourth quarter. Sales
performance was led by above-market growth in the U.S. and
internationally, where Abbott is achieving continued strong adoption of
its Alinity(®) family of innovative and highly differentiated
diagnostic instruments.
"Our focus on organic growth is driving top-tier performance," said Miles D. White, chairman and chief executive officer, Abbott. "We're entering 2020 with very good momentum and targeting continued strong growth."
* See note on organic growth below.
FOURTH-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business.
Organic sales growth:
-- Excludes the results for a non-core business within U.S. Adult Nutrition
during the first nine months of 2018 as this business was discontinued
during the third quarter 2018; and
-- Excludes the impact of foreign exchange.
Following are sales by business segment and commentary for the fourth quarter and full year 2019:
Total Company
($ in millions)
---
% Change vs. 4Q18
Sales 4Q19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total * 2,960 5,354 8,314 7.5 6.9 7.1 7.5 9.1 8.5
Nutrition 789 1,079 1,868 3.6 6.4 5.2 3.6 7.5 5.8
Diagnostics 766 1,292 2,058 9.6 2.4 5.0 9.6 4.6 6.4
Established Pharmaceuticals 1,174 1,174
n/a 7.8 7.8
n/a 10.0 10.0
Medical Devices 1,404 1,800 3,204 9.2 10.1 9.7 9.2 12.9 11.3
* Total Q4 2019 Abbott sales from continuing operations include Other Sales of $10 million.
% Change vs. 12M18
Sales 12M19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total * 11,398 20,506 31,904 5.2 3.9 4.3 5.5 8.8 7.7
Nutrition 3,110 4,299 7,409 1.1 3.5 2.5 2.4 7.5 5.3
Diagnostics 2,887 4,826 7,713 6.3 1.0 2.9 6.3 5.7 5.9
Established Pharmaceuticals 4,486 4,486
n/a 1.4 1.4
n/a 7.3 7.3
Medical Devices 5,374 6,865 12,239 7.2 8.0 7.6 7.2 13.0 10.5
* Total 12M 2019 Abbott sales
from continuing operations
include Other Sales of $57
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.
Fourth-quarter 2019 worldwide sales of $8.3 billion increased 7.1 percent on a reported basis. On an organic basis, worldwide sales increased 8.5 percent. Refer to table titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.
Nutrition
($ in millions)
---
% Change vs. 4Q18
Sales 4Q19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 789 1,079 1,868 3.6 6.4 5.2 3.6 7.5 5.8
Pediatric 473 564 1,037 1.2 3.4 2.4 1.2 4.1 2.8
Adult 316 515 831 7.3 9.9 8.9 7.3 11.5 9.9
% Change vs. 12M18
Sales 12M19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 3,110 4,299 7,409 1.1 3.5 2.5 2.4 7.5 5.3
Pediatric 1,879 2,282 4,161 1.9 1.3 1.6 1.9 4.6 3.4
Adult 1,231 2,017 3,248 (0.1) 6.2 3.7 3.2 10.9 7.9
Worldwide Nutrition sales increased 5.2 percent on a reported basis in the fourth quarter. On an organic basis, sales increased 5.8 percent. Refer to table titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.
Worldwide Pediatric Nutrition sales increased 2.4 percent on a reported basis in the fourth quarter, including an unfavorable 0.4 percent effect of foreign exchange, and increased 2.8 percent on an organic basis. International sales increased 3.4 percent on a reported basis and 4.1 percent on an organic basis. Sales growth was led by Abbott's market-leading toddler brands, PediaSure(®) and Pedialyte(®).
Worldwide Adult Nutrition sales increased 8.9 percent on a reported basis in the fourth quarter and increased 9.9 percent on an organic basis. International Adult Nutrition sales increased 9.9 percent on a reported basis and 11.5 percent on an organic basis in the fourth quarter. Sales performance in the quarter 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.
Diagnostics
($ in millions)
---
% Change vs. 4Q18
Sales 4Q19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 766 1,292 2,058 9.6 2.4 5.0 9.6 4.6 6.4
Core Laboratory 293 956 1,249 13.2 7.0 8.4 13.2 9.1 10.0
Molecular 36 80 116 (4.1) (6.5) (5.7) (4.1) (4.5) (4.4)
Point of Care 104 33 137 (4.9) 16.0 (0.5) (4.9) 17.4 (0.2)
Rapid Diagnostics 333 223 556 13.6 (12.3) 1.5 13.6 (9.8) 2.7
% Change vs. 12M18
Sales 12M19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 2,887 4,826 7,713 6.3 1.0 2.9 6.3 5.7 5.9
Core Laboratory 1,086 3,570 4,656 10.3 4.9 6.2 10.3 9.9 10.0
Molecular 149 293 442 (1.8) (11.7) (8.6) (1.8) (8.4) (6.3)
Point of Care 438 123 561 1.4 1.7 1.5 1.4 3.9 1.9
Rapid Diagnostics 1,214 840 2,054 5.7 (9.0) (0.8) 5.7 (4.4) 1.2
Worldwide Diagnostics sales increased 5.0 percent on a reported basis in the fourth quarter, including an unfavorable 1.4 percent effect of foreign exchange, and increased 6.4 percent on an organic basis.
Core Laboratory Diagnostics sales increased 8.4 percent on a reported basis and 10.0 percent on an organic basis in the fourth quarter. Sales performance was led by above-market growth in the U.S. and internationally, where Abbott is achieving continued strong adoption of its Alinity family of innovative and highly differentiated diagnostic instruments. During the quarter, Abbott announced the Australian Red Cross Blood Services selected its Alinity-S system for the country's blood and plasma screening.
Molecular Diagnostics sales decreased 5.7 percent on a reported basis in the fourth quarter, including an unfavorable 1.3 percent effect of foreign exchange, and decreased 4.4 percent on an organic basis.
Point of Care Diagnostics sales decreased 0.5 percent on a reported basis in the fourth quarter, including an unfavorable 0.3 percent effect of foreign exchange, and decreased 0.2 percent on an organic basis.
Rapid Diagnostics sales increased 1.5 percent on a reported basis in the fourth quarter, including an unfavorable 1.2 percent effect of foreign exchange, and increased 2.7 percent on an organic basis. Organic sales growth was led by infectious disease testing in developed markets and cardio-metabolic testing globally, partially offset by lower infectious disease testing sales in Africa.
Established Pharmaceuticals
($ in millions)
---
% Change vs. 4Q18
Sales 4Q19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,174 1,174
n/a 7.8 7.8
n/a 10.0 10.0
Key Emerging
Markets 896 896
n/a 7.0 7.0
n/a 9.5 9.5
Other 278 278
n/a 10.4 10.4
n/a 11.6 11.6
% Change vs. 12M18
Sales 12M19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 4,486 4,486
n/a 1.4 1.4
n/a 7.3 7.3
Key Emerging
Markets 3,392 3,392
n/a 0.9 0.9
n/a 7.9 7.9
Other 1,094 1,094
n/a 3.3 3.3
n/a 5.6 5.6
Established Pharmaceuticals sales increased 7.8 percent on a reported basis in the fourth quarter, including an unfavorable 2.2 percent effect of foreign exchange, and increased 10.0 percent on an organic basis.
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 increased 7.0 percent on a reported basis in the fourth quarter and increased 9.5 percent on an organic basis, which excludes an unfavorable 2.5 percent effect of foreign exchange. Organic sales growth was led by performance across several geographies in Latin America and Asia.
Other sales increased 10.4 percent on a reported basis in the fourth quarter, including an unfavorable 1.2 percent effect of foreign exchange, and increased 11.6 percent on an organic basis.
Medical Devices
($ in millions)
---
% Change vs. 4Q18
Sales 4Q19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,404 1,800 3,204 9.2 10.1 9.7 9.2 12.9 11.3
Rhythm Management 267 277 544 1.8 2.8 2.3 1.8 5.5 3.7
Electrophysiology 193 266 459 7.7 11.8 10.0 7.7 13.1 10.8
Heart Failure 146 52 198 16.8 (0.8) 11.6 16.8 2.1 12.5
Vascular 260 454 714 (4.6) 1.5 (0.8) (4.6) 3.2 0.3
Structural Heart 170 206 376 25.7 7.7 15.1 25.7 10.8 17.0
Neuromodulation 175 47 222 (0.9) 14.6 2.0 (0.9) 20.0 3.0
Diabetes Care 193 498 691 43.5 26.0 30.5 43.5 30.3 33.7
Vascular Product Lines:
Coronary and Endovasculara) 239 452 691 (2.9) 1.2 (0.3) (2.9) 2.9 0.8
a) Includes drug-
eluting stents,
balloon
catheters,
guidewires,
vascular imaging/
diagnostics
products, vessel
closure, carotid
and other
coronary and
peripheral
products.
% Change vs. 12M18
Sales 12M19 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 5,374 6,865 12,239 7.2 8.0 7.6 7.2 13.0 10.5
Rhythm Management 1,057 1,087 2,144 (4.4) (0.6) (2.5) (4.4) 4.4 0.0
Electrophysiology 742 979 1,721 9.5 10.8 10.2 9.5 14.8 12.5
Heart Failure 574 195 769 22.9 9.4 19.1 22.9 14.1 20.5
Vascular 1,047 1,803 2,850 (7.0) 0.0 (2.7) (7.0) 4.1 (0.2)
Structural Heart 616 784 1,400 26.1 4.3 12.9 26.1 9.7 16.2
Neuromodulation 660 171 831 (4.2) (1.8) (3.8) (4.2) 4.7 (2.4)
Diabetes Care 678 1,846 2,524 48.3 25.1 30.6 48.3 31.8 35.7
Vascular Product Lines:
Coronary and Endovasculara) 947 1,793 2,740 (3.9) 0.0 (1.4) (3.9) 4.1 1.3
a) Includes drug-
eluting stents,
balloon
catheters,
guidewires,
vascular imaging/
diagnostics
products, vessel
closure, carotid
and other
coronary and
peripheral
products.
Note: Insertable Cardiac Monitor (ICM)
sales, which had previously been reported
in Electrophysiology, are now included in
Rhythm Management. Historical periods have
been adjusted to reflect this change.
Worldwide Medical Devices sales increased 9.7 percent on a reported basis in the fourth quarter and increased 11.3 percent on an organic basis, led by double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care.
In Electrophysiology, growth was led by strong performance in cardiac diagnostic and ablation catheters, which are used to help physicians accurately and effectively treat atrial fibrillation, a form of irregular heartbeat.
In Heart Failure, double-digit growth was driven by market adoption of Abbott's HeartMate 3(®) left ventricular assist device, which has been shown to improve survival and clinical outcomes in patients with advanced heart failure.
Growth in Structural Heart was led by MitraClip(®), Abbott's market-leading device for the minimally invasive treatment of mitral regurgitation, or a leaky mitral heart valve. Worldwide sales of MitraClip were $191 million in the fourth quarter, an increase of 27.1 percent on a reported basis and 28.8 percent on an organic basis versus the prior year.
In Diabetes Care, sales increased 30.5 percent on a reported basis and 33.7 percent on an organic basis in the fourth quarter. Sales growth in the quarter was led by FreeStyle Libre(®), Abbott's revolutionary continuous glucose monitoring system, with worldwide sales of $534 million, an increase of 58.5 percent on a reported basis and 62.4 percent on an organic basis versus the prior year.
ABBOTT ISSUES GUIDANCE FOR 2020
Abbott is issuing full-year 2020 guidance for organic sales growth of 7.0 to 8.0 percent(2), which excludes the impact of foreign exchange, and diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $2.35 to $2.45. Abbott forecasts net specified items for the full year 2020 of $1.20 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 $3.55 to $3.65 for the full year 2020.
Abbott is issuing first-quarter 2020 guidance for diluted earnings per share from continuing operations under GAAP of $0.40 to $0.42. Abbott forecasts specified items for the first quarter 2020 of $0.29 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 $0.69 to $0.71 for the first quarter.
ABBOTT ANNOUNCES INCREASE IN QUARTERLY DIVIDEND
On Dec. 13, 2019, the board of directors of Abbott increased the company's quarterly dividend to $0.36 per share from $0.32 per share, an increase of 12.5 percent. Abbott's cash dividend is payable Feb. 14, 2020, to shareholders of record at the close of business on Jan. 15, 2020.
Abbott has increased its dividend payout for 48 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.
About Abbott:
Abbott is a global healthcare leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritionals and branded generic medicines. Our 107,000 colleagues serve people in more than 160 countries.
Connect with us at www.abbott.com, on LinkedIn at www.linkedin.com/company/abbott-/, on Facebook at www.facebook.com/Abbott and on Twitter @AbbottNews and @AbbottGlobal.
Abbott will webcast its live fourth-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8:30 a.m. Central time today. An archived edition of the webcast will be available later that day.
-- Private Securities Litigation Reform Act of 1995 --
A Caution Concerning Forward-Looking Statements
Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors'' to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2018, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.
(1) Fourth-quarter 2019 diluted EPS
from continuing operations on a GAAP
basis reflects 59.5 percent growth.
(2) Abbott has not provided the GAAP
financial measure for organic sales
growth on a forward-looking basis
because the company is unable to
predict the impact of foreign
exchange due to the unpredictability
of future changes in foreign
exchange rates, which could
significantly impact reported sales
growth.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Fourth Quarter Ended December 31, 2019 and 2018
(in millions, except per share data)
(unaudited)
4Q19 4Q18 % Change
Net Sales $8,314 $7,765 7.1
Cost of products sold,
excluding amortization
expense 3,434 3,191 7.7
Amortization of intangible
assets 483 488 (1.1)
Research and development 595 562 6.0
Selling, general, and
administrative 2,413 2,359 2.3
Total Operating Cost and
Expenses 6,925 6,600 4.9
Operating Earnings 1,389 1,165 19.2
Interest expense, net 139 152 (8.5)
Net foreign exchange (gain)
loss (2) 26
n/m
Debt extinguishment costs 63 86 (27.1)
Other (income) expense, net (51) (46) 13.5
Earnings from Continuing
Operations before taxes 1,240 947 31.1
Tax expense on Earnings from
Continuing Operations 191 292 (34.5) 1)
Earnings from Continuing
Operations 1,049 655 60.3
Earnings from Discontinued
Operations, net of taxes (1)
n/m
Net Earnings $1,049 $654 60.6
Earnings from Continuing
Operations, excluding
Specified Items, as described
below $1,705 $1,444 18.1 2)
Diluted Earnings per Common
Share from:
Continuing Operations $0.59 $0.37 59.5
Discontinued Operations
n/m
Total $0.59 $0.37 59.5
Diluted Earnings per Common
Share from Continuing
Operations, excluding
Specified Items, as described
below $0.95 $0.81 17.3 2)
Average Number of Common
Shares Outstanding
Plus Dilutive Common Stock
Options 1,781 1,774
NOTES:
See tables titled "Non-GAAP
Reconciliation of Financial
Information From Continuing
Operations" for an explanation of
certain non-GAAP financial
information.
n/m = Percent change is not
meaningful.
See footnotes below.
1) 2018 Tax expense on Earnings
from Continuing Operations
includes an additional $85
million of tax expense for the
transition tax associated with
the Tax Cuts and Jobs Act
(TCJA).
2) 2019 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations,
excluding Specified Items,
excludes net after-tax charges
of $656 million, or $0.36 per
share, for intangible
amortization expense and other
expenses primarily associated
with acquisitions and
restructuring actions.
2018 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations,
excluding Specified Items,
excludes net after-tax charges
of $789 million, or $0.44 per
share, for intangible
amortization expense and other
expenses primarily associated
with acquisitions and
restructuring actions, as well
as additional transition tax
related to the TCJA.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Year Ended December 31, 2019 and 2018
(in millions, except per share data)
(unaudited)
12M19 12M18 % Change
Net Sales $31,904 $30,578 4.3
Cost of products sold,
excluding amortization
expense 13,231 12,706 4.1
Amortization of intangible
assets 1,936 2,178 (11.1)
Research and development 2,440 2,300 6.1 1)
Selling, general, and
administrative 9,765 9,744 0.2
Total Operating Cost and
Expenses 27,372 26,928 1.7
Operating Earnings 4,532 3,650 24.2
Interest expense, net 576 721 (20.1)
Net foreign exchange (gain)
loss 7 28 (74.1)
Debt extinguishment costs 63 167 (62.6)
Other (income) expense, net (191) (139) 38.2
Earnings from Continuing
Operations before taxes 4,077 2,873 42.0
Tax expense on Earnings from
Continuing Operations 390 539 (27.6) 2)
Earnings from Continuing
Operations 3,687 2,334 58.0
Earnings from Discontinued
Operations, net of taxes 34
n/m
Net Earnings $3,687 $2,368 55.7
Earnings from Continuing
Operations, excluding
Specified Items, as described
below $5,810 $5,131 13.2 3)
Diluted Earnings per Common
Share from:
Continuing Operations $2.06 $1.31 57.3
Discontinued Operations 0.02
n/m
Total $2.06 $1.33 54.9
Diluted Earnings per Common
Share from Continuing
Operations, excluding
Specified Items, as described
below $3.24 $2.88 12.5 3)
Average Number of Common
Shares Outstanding
Plus Dilutive Common Stock
Options 1,781 1,770
NOTES:
See tables titled "Non-GAAP
Reconciliation of Financial
Information From Continuing
Operations" for an explanation of
certain non-GAAP financial
information.
n/m = Percent change is not
meaningful.
See footnotes below.
1) In 2019, in conjunction with the
acquisition of Cephea Valve
Technologies, Inc., Abbott acquired
an R&D asset valued at $102
million, which was immediately
expensed.
2) 2019 Tax expense on Earnings from
Continuing Operations includes the
impact of a $86 million reduction
of the transition tax associated
with the Tax Cuts and Jobs Act
(TCJA) and approximately $100
million in excess tax benefits
associated with share-based
compensation.
2018 Tax expense on Earnings from
Continuing Operations includes an
additional $120 million of tax
expense for the transition tax
associated with the TCJA, as well
as the impact of approximately $90
million in excess tax benefits
associated with share-based
compensation.
3) 2019 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $2.123
billion, or $1.18 per share, for
intangible amortization expense and
other expenses primarily associated
with acquisitions and restructuring
actions.
2018 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $2.797
billion, or $1.57 per share, for
intangible amortization expense and
other expenses primarily associated
with acquisitions and restructuring
actions.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
Fourth Quarter Ended December 31, 2019 and 2018
(in millions, except per share data)
(unaudited)
4Q19
As Specified
As % to
Reported Items Adjusted
(GAAP)
Sales
Intangible Amortization
$483 $(483)
Gross Margin 4,397 545 4,942 59.4%
R&D 595 (39) 556 6.7%
SG&A 2,413 (62) 2,351 28.3%
Debt extinguishment costs 63 (63)
Other (income) expense, net (51) (5) (56)
Earnings from Continuing
Operations before taxes 1,240 714 1,954
Tax expense on Earnings from
Continuing Operations 191 58 249
Earnings from Continuing
Operations 1,049 656 1,705
Diluted Earnings per Share from
Continuing Operations $0.59 $0.36 $0.95
Specified items reflect intangible amortization expense of $483 million and other expenses of $231 million, primarily associated with acquisitions, restructuring
actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
4Q18
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization
$488 $(488)
Gross Margin 4,086 520 4,606 59.3%
R&D 562 (2) 560 7.2%
SG&A 2,359 (91) 2,268 29.2%
Net foreign exchange (gain) loss 26 (28) (2)
Debt extinguishment costs 86 (86)
Other (income) expense, net (46) 13 (33)
Earnings from Continuing
Operations before taxes 947 714 1,661
Tax expense on Earnings from
Continuing Operations 292 (75) 217
Earnings from Continuing
Operations 655 789 1,444
Diluted Earnings per Share from
Continuing Operations $0.37 $0.44 $0.81
Specified items reflect intangible amortization expense of $488 million and other expenses of $226 million, primarily associated with acquisitions, restructuring
actions and other expenses, as well as $85 million of additional transition tax related to the TCJA. See tables titled "Details of Specified Items" for additional
details regarding specified items.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
Year Ended December 31, 2019 and 2018
(in millions, except per share data)
(unaudited)
12M19
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization
$(1,936)
$1,936
Gross Margin 16,737 2,140 18,877 59.2%
R&D 2,440 (198) 2,242 7.0%
SG&A 9,765 (240) 9,525 29.9%
Debt extinguishment costs 63 (63)
Other (income) expense, net (191) (37) (228)
Earnings from Continuing
Operations before taxes 4,077 2,678 6,755
Tax expense on Earnings from
Continuing Operations 390 555 945
Earnings from Continuing
Operations 3,687 2,123 5,810
Diluted Earnings per Share from
Continuing Operations $2.06 $1.18 $3.24
Specified items reflect intangible amortization expense of $1.936 billion and other expenses of $742 million, primarily associated with acquisitions, restructuring
actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
12M18
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization
$(2,178)
$2,178
Gross Margin 15,694 2,453 18,147 59.3%
R&D 2,300 (87) 2,213 7.2%
SG&A 9,744 (365) 9,379 30.7%
Interest expense, net 721 (2) 719
Net foreign exchange (gain) loss 28 (29) (1)
Debt extinguishment costs 167 (167)
Other (income) expense, net (139) 3 (136)
Earnings from Continuing
Operations before taxes 2,873 3,100 5,973
Tax expense on Earnings from
Continuing Operations 539 303 842
Earnings from Continuing
Operations 2,334 2,797 5,131
Diluted Earnings per Share from
Continuing Operations $1.31 $1.57 $2.88
Specified items reflect intangible amortization expense of $2.178 billion and other expenses of $922 million, primarily associated with acquisitions, restructuring
actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
A reconciliation of the fourth-quarter tax rates for continuing operations for 2019 and 2018 is shown below:
4Q19
($ in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $1,240 $191 15.4%
Specified
items 714 58
Excluding
specified
items $1,954 $249 12.8%
4Q18
($ in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $947 $292 30.8% 1)
Specified
items 714 (75)
Excluding
specified
items $1,661 $217 13.1%
1) Reported tax rate on a GAAP
basis for the fourth
quarter of 2018 includes
the impact of an additional
$85 million of tax expense
for the transition tax
associated with the TCJA.
A reconciliation of the year-to-date tax rates for continuing operations for 2019 and 2018 is shown below:
12M19
($ in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $4,077 $390 9.6% 2)
Specified
items 2,678 555
Excluding
specified
items $6,755 $945 14.0%
12M18
($ in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $2,873 $539 18.8% 3)
Specified
items 3,100 303
Excluding
specified
items $5,973 $842 14.1%
2) Reported tax rate on a GAAP basis
for 2019 includes the impact of a
$86 million reduction of the
transition tax associated with the
TCJA and approximately $100 million
in excess tax benefits associated
with share-based compensation.
3) Reported tax rate on a GAAP basis
for 2018 includes the impact of an
additional $120 million of tax
expense for the transition tax
associated with the TCJA, as well
as the impact of approximately $90
million in excess tax benefits
associated with share-based
compensation.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Adjusted Historical Revenue
Year Ended December 31, 2019 and 2018
($ in millions) (unaudited)
12M19
12M18 % Change vs. 12M18
Abbott Abbott Discontinued Adjusted Non-GAAP
Reported Reported Businessa) Revenue
Reported Reported Organicb)
Total Company 31,904 30,578 (38) 30,540 4.3 4.5 7.7
U.S. 11,398 10,839 (38) 10,801 5.2 5.5 5.5
Int'l 20,506 19,739 19,739 3.9 3.9 8.8
Total Nutrition 7,409 7,229 (38) 7,191 2.5 3.0 5.3
U.S. 3,110 3,075 (38) 3,037 1.1 2.4 2.4
Int'l 4,299 4,154 4,154 3.5 3.5 7.5
Adult 3,248 3,132 (38) 3,094 3.7 5.0 7.9
U.S. 1,231 1,232 (38) 1,194 (0.1) 3.2 3.2
Int'l 2,017 1,900 1,900 6.2 6.2 10.9
a) Reflects
sales
related to a
non-core
product line
within the
U.S. Adult
Nutrition
business,
which was
discontinued
during the
third
quarter
2018.
b) 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.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Fourth Quarter Ended December 31, 2019
(in millions, except per share data)
(unaudited)
Acquisition or
Restructuring
Intangible
Other (c)
Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
Gross Margin $34 $28 $483
$ -- $545
R&D (15) (22) (2) (39)
SG&A (39) (23) (62)
Debt extinguishment costs (63) (63)
Other (income) expense, net (5) (5)
Earnings from Continuing
Operations before taxes $93 $73 $483 $65 714
Tax expense on Earnings from
Continuing Operations (d) 58
Earnings from Continuing
Operations $656
Diluted Earnings per Share from
Continuing Operations $0.36
The table above provides additional details
regarding the specified items described on the
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses include
costs for tax and other services
related to business acquisitions,
integration costs which represent
incremental costs directly related
to integrating the acquired
businesses and include expenditures
for retention, severance, and the
integration of systems, processes
and business activities.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, asset
impairments, and other direct costs
associated with specific
restructuring plans and cost
reduction initiatives. Restructuring
and cost reduction plans consist of
distinct initiatives to streamline
operations including the
consolidation and rationalization of
business activities and facilities,
workforce reductions, the transfer
of product lines between
manufacturing facilities, and the
transfer of other business
activities between sites.
c) Other primarily relates to costs
associated with the early
extinguishment of debt.
d) Reflects the net tax benefit
associated with the specified items
and excess tax benefits associated
with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Fourth Quarter Ended December 31, 2018
(in millions, except per share data)
(unaudited)
Acquisition or
Restructuring
Intangible
Other (c)
Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
Gross Margin $21 $7 $488 $4 $520
R&D (7) 5 (2)
SG&A (82) (9) (91)
Net foreign exchange (gain)
loss (28) (28)
Debt extinguishment costs (86) (86)
Other (income) expense, net (1) 14 13
Earnings from Continuing
Operations before taxes $111 $39 $488 $76 714
Tax expense on Earnings from
Continuing Operations (d) (75)
Earnings from Continuing
Operations $789
Diluted Earnings per Share from
Continuing Operations $0.44
The table above provides additional details
regarding the specified items described on the
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses include
costs for tax and other services
related to business acquisitions,
integration costs which represent
incremental costs directly related
to integrating the acquired
businesses and include expenditures
for retention, severance, and the
integration of systems, processes
and business activities, and fair
value adjustments to contingent
consideration related to a business
acquisition.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, inventory
write-downs, asset impairments,
accelerated depreciation, and other
direct costs associated with
specific restructuring plans and
cost reduction initiatives.
Restructuring and cost reduction
plans consist of distinct
initiatives to streamline operations
including the consolidation and
rationalization of business
activities and facilities, workforce
reductions, the transfer of product
lines between manufacturing
facilities, and the transfer of
other business activities between
sites.
c) Other includes costs associated with
the early extinguishment of debt,
partially offset by a gain on
investments.
d) Reflects the net tax benefit
associated with the specified items
and additional tax expense for the
transition tax associated with the
TCJA.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Year Ended December 31, 2019
(in millions, except per share data)
(unaudited)
Acquisition or Restructuring
Intangible
Other (c)
Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
Gross Margin $103 $101 $1,936
$ -- $2,140
R&D (38) (44) (116) (198)
SG&A (153) (70) (17) (240)
Debt extinguishment costs (63) (63)
Other (income) expense, net (15) (22) (37)
Earnings from Continuing
Operations before taxes $309 $215 $1,936 $218 2,678
Tax expense on Earnings from
Continuing Operations (d) 555
Earnings from Continuing
Operations $2,123
Diluted Earnings per Share from
Continuing Operations $1.18
The table above provides additional details
regarding the specified items described on the
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses include
costs for tax and other services
related to business acquisitions,
integration costs which represent
incremental costs directly related
to integrating the acquired
businesses and include expenditures
for retention, severance, and the
integration of systems, processes
and business activities, and fair
value adjustments to contingent
consideration related to a business
acquisition.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, asset
impairments, and other direct costs
associated with specific
restructuring plans and cost
reduction initiatives. Restructuring
and cost reduction plans consist of
distinct initiatives to streamline
operations including the
consolidation and rationalization of
business activities and facilities,
workforce reductions, the transfer
of product lines between
manufacturing facilities, and the
transfer of other business
activities between sites.
c) Other relates to the acquisition of
R&D assets, costs associated with
the early extinguishment of debt,
charges related to the impairment of
certain assets, and expenses related
to certain litigation settlements.
d) Reflects the net tax benefit
associated with the specified items,
a reduction in the transition tax
associated with the TCJA and excess
tax benefits associated with share-
based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Year Ended December 31, 2018
(in millions, except per share data)
(unaudited)
Acquisition or
Restructuring
Intangible
Other (c)
Total
Divestiture- and Cost Amortization Specifieds
related (a) Reduction
Initiatives (b)
Gross Margin $123 $106 $2,178 $46 $2,453
R&D (41) 1 (47) (87)
SG&A (346) (19) (365)
Interest expense, net (2) (2)
Net foreign exchange (gain)
loss (29) (29)
Debt extinguishment costs (167) (167)
Other (income) expense, net (2) 5 3
Earnings from Continuing
Operations before taxes $512 $153 $2,178 $257 3,100
Tax expense on Earnings from
Continuing Operations (d) 303
Earnings from Continuing
Operations $2,797
Diluted Earnings per Share from
Continuing Operations $1.57
The table above provides additional details
regarding the specified items described on the
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses include
costs for legal, accounting, tax,
and other services related to
business acquisitions, integration
costs which represent incremental
costs directly related to
integrating the acquired businesses
and include expenditures for
consulting, retention, severance,
and the integration of systems,
processes and business activities,
fair value adjustments to contingent
consideration related to a business
acquisition, and inventory step-up
amortization.
b) Restructuring and cost reduction
initiative expenses include
severance, outplacement, inventory
write-downs, asset impairments,
accelerated depreciation, and other
direct costs associated with
specific restructuring plans and
cost reduction initiatives.
Restructuring and cost reduction
plans consist of distinct
initiatives to streamline operations
including the consolidation and
rationalization of business
activities and facilities, workforce
reductions, the transfer of product
lines between manufacturing
facilities, and the transfer of
other business activities between
sites.
c) Other includes the cost associated
with the early extinguishment of
debt, costs related to the
acquisition of R&D assets and
charges related to the impairment of
certain assets, partially offset by
a gain on investments.
d) Reflects the net tax benefit
associated with the specified items,
additional tax expense for the
transition tax associated with the
TCJA and excess tax benefits
associated with share-based
compensation.
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SOURCE Abbott
