Abbott Reports First-Quarter 2020 Results
ABBOTT PARK, Ill., April 16, 2020 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the first quarter ended March 31, 2020.
-- First-quarter worldwide sales of $7.7 billion increased 2.5 percent on a
reported basis and 4.3 percent on an organic* basis.
-- Reported diluted EPS from continuing operations under GAAP was $0.30 and
adjusted diluted EPS from continuing operations, which excludes
specified items, was $0.65 in the first quarter.
-- Due to uncertainties regarding the duration and impact of the
coronavirus (COVID-19) pandemic, Abbott is suspending its previously
announced annual guidance for 2020.
-- Abbott's strong financial position is supported by a healthy balance
sheet, including approximately $3.7 billion in cash, cash equivalents
and short-term investments, and revolving credit facilities in place
that could provide additional access to up to $5 billion, if needed.
-- Abbott recently launched three diagnostics tests for COVID-19, including
molecular tests on its ID NOW(TM) rapid point-of-care platform and
m2000(TM) RealTime lab-based platform, and a serology blood test for the
detection of the antibody, IgG, on its lab-based immunoassay platforms.
-- Abbott recently announced CE Mark approvals for several cardiovascular
devices, including TriClip(TM), the world's first minimally invasive,
clip-based repair device for the treatment of tricuspid regurgitation,
or leaky tricuspid heart valve; Tendyne(TM), a first-of-its-kind
technology to replace a faulty mitral heart valve; and Gallant(TM)
implantable cardioverter defibrillator (ICD) and cardiac
resynchronization therapy defibrillator (CRT-D) devices to help manage
heart rhythm disorders.
-- During the quarter, Abbott announced expanded reimbursement coverage for
FreeStyle(®) Libre in Japan to include people with Type 2 diabetes that
inject insulin multiple times per day.
"First and foremost, I want to thank our employees, our customers, and our suppliers for their extraordinary efforts to maintain supply of our critically important products to the people who need them, around the world," said Robert B. Ford, president and chief executive officer, Abbott. "It's an unprecedented time and our colleagues are rising to it in unprecedented ways."
ABBOTT'S RESPONSE TO COVID-19
Abbott has mobilized its teams across multiple fronts to help stem the spread of the virus and support healthcare systems, patients, its employees and local communities. Most notably, the company has launched three critical new tests for COVID-19: the Abbott ID NOW COVID-19 molecular test, the fastest available molecular point-of-care test delivering results within 13 minutes and positive results in as little as five minutes, the Abbott RealTime SARS-CoV-2 molecular test, which runs on Abbott's m2000 RealTime System located in hospital and reference laboratories, and a serology blood test for the detection of the antibody, IgG, on its lab-based immunoassay testing platforms. While molecular testing detects whether someone has the virus, antibody tests determine if someone was previously infected.
The company is supporting impacted frontline health workers, families and communities around the world with philanthropic donations to help address key needs, including providing personal protective equipment, patient care supplies and training. To protect its employees, most work is being conducted remotely and the company has implemented strict travel restrictions. Abbott has taken aggressive steps to limit exposure and enhance the safety of its facilities for employees working to continue to supply vital healthcare products to hospitals, healthcare professionals, laboratories and patients around the world.
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 the impact of foreign exchange.
Following are sales by business segment and commentary for the first quarter 2020:
Total Company
---
($ in millions)
% Change vs. 1Q19
Sales 1Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total * 2,856 4,870 7,726 3.7 1.8 2.5 3.7 4.6 4.3
Nutrition 812 1,092 1,904 8.7 4.6 6.3 8.7 6.3 7.3
Diagnostics 803 1,023 1,826 10.9 (8.4) (0.8) 10.9 (5.9) 0.7
Established Pharmaceuticals 1,044 1,044
n/a 5.2 5.2
n/a 9.3 9.3
Medical Devices 1,233 1,704 2,937 (3.3) 5.1 1.4 (3.3) 7.8 2.9
* Total Q1 2020 Abbott sales
from continuing operations
include Other Sales of $15
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 2020 worldwide sales of $7.7 billion increased 2.5 percent on a reported basis. On an organic basis, worldwide sales increased 4.3 percent.
Nutrition
---
($ in millions)
% Change vs. 1Q19
Sales 1Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 812 1,092 1,904 8.7 4.6 6.3 8.7 6.3 7.3
Pediatric 518 571 1,089 14.3 (0.8) 5.8 14.3 0.2 6.4
Adult 294 521 815 0.1 11.2 6.9 0.1 13.8 8.5
Worldwide Nutrition sales increased 6.3 percent on a reported basis in the first quarter and increased 7.3 percent on an organic basis. Sales growth was positively impacted in the quarter by increased demand in late March in advance of shelter-in-place restrictions related to the coronavirus (COVID-19) pandemic, most notably in U.S. Pediatric Nutrition.
Diagnostics
---
($ in millions)
% Change vs. 1Q19
Sales 1Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 803 1,023 1,826 10.9 (8.4) (0.8) 10.9 (5.9) 0.7
Core Laboratory 267 722 989 6.9 (11.1) (6.8) 6.9 (8.5) (4.9)
Molecular 65 74 139 61.7 9.6 29.1 61.7 11.6 30.3
Point of Care 103 35 138 (4.9) 32.6 2.4 (4.9) 34.3 2.7
Rapid Diagnostics 368 192 560 13.0 (9.1) 4.3 13.0 (6.3) 5.4
Worldwide Diagnostics sales decreased 0.8 percent on a reported basis in the first quarter, including an unfavorable 1.5 percent effect of foreign exchange, and increased 0.7 percent on an organic basis. Core Laboratory Diagnostics sales growth was negatively impacted by lower routine testing volumes due to the coronavirus (COVID-19). Abbott recently launched three critical new tests for COVID-19: the Abbott ID NOW COVID-19 molecular test, the fastest available molecular point-of-care test delivering results within 13 minutes and positive results in as little as five minutes, the Abbott RealTime SARS-CoV-2 molecular test, which runs on Abbott's m2000 RealTime System located in hospital and reference laboratories, and a serology blood test for the detection of the antibody, IgG, on its lab-based immunoassay testing platforms. While molecular testing detects whether someone has the virus, antibody tests determine if someone was previously infected.
Established Pharmaceuticals
---
($ in millions)
% Change vs. 1Q19
Sales 1Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,044 1,044
n/a 5.2 5.2
n/a 9.3 9.3
Key Emerging
Markets 813 813
n/a 8.1 8.1
n/a 13.1 13.1
Other 231 231
n/a (3.7) (3.7)
n/a (2.7) (2.7)
Established Pharmaceuticals sales increased 5.2 percent on a reported basis in the first quarter and increased 9.3 percent on an organic basis. Organic sales growth in the quarter was led by strong growth across several geographies, including Russia, Brazil and several countries across Latin America and Southeast Asia.
Medical Devices
---
($ in millions)
% Change vs. 1Q19
Sales 1Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,233 1,704 2,937 (3.3) 5.1 1.4 (3.3) 7.8 2.9
Rhythm Management 228 246 474 (9.4) (6.4) (7.9) (9.4) (3.8) (6.5)
Electrophysiology 164 224 388 (5.9) (2.6) (4.0) (5.9) (0.6) (2.9)
Heart Failure 152 51 203 6.3 22.6 9.9 6.3 25.5 10.6
Vascular 230 395 625 (13.5) (10.9) (11.9) (13.5) (9.1) (10.8)
Structural Heart 136 182 318 (0.1) (3.0) (1.8) (0.1) (0.3) (0.2)
Neuromodulation 137 40 177 (10.3) (2.7) (8.7) (10.3) 1.4 (7.8)
Diabetes Care 186 566 752 22.9 36.5 32.9 22.9 40.3 35.6
Vascular Product Lines:
Coronary and Endovasculara 211 392 603 (10.2) (11.0) (10.7) (10.2) (9.2) (9.5)
a)
Includes drug-eluting
stents, balloon catheters, guidewires,
vascular imaging/diagnostics products, vessel
closure, carotid and other coronary and
peripheral products.
Worldwide Medical Devices sales increased 1.4 percent on a reported basis in the first quarter and increased 2.9 percent on an organic basis. Sales growth in both cardiovascular and neuromodulation businesses was negatively impacted by reduced procedure volumes due to the coronavirus (COVID-19) pandemic. Due to the critical nature of these products, the company anticipates strong demand when the availability of healthcare resources returns to normal levels.
In Diabetes Care, growth was led by FreeStyle Libre, with worldwide sales of more than $600 million in the quarter, an increase of 59.3 percent on a reported basis and 62.5 percent on an organic basis versus the prior year. During the quarter, Abbott obtained expanded reimbursement coverage for FreeStyle Libre in Japan to include people with Type 2 diabetes that inject insulin multiple times per day to manage their condition.
ABBOTT'S GUIDANCE FOR 2020
Due to uncertainties regarding the duration and impact of the coronavirus (COVID-19) pandemic, Abbott is suspending its previously announced annual guidance for 2020.
ABBOTT DECLARES 385(TH) CONSECUTIVE QUARTERLY DIVIDEND
On Feb. 21, 2020, the board of directors of Abbott declared the company's quarterly dividend of $0.36 per share. Abbott's cash dividend is payable May 15, 2020, to shareholders of record at the close of business on April 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 first-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8:00 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, including the impact of the COVID-19 pandemic on Abbott's operations and financial results, 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, 2019, 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.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
First Quarter Ended March 31, 2020 and 2019
(in millions, except per share data)
(unaudited)
1Q20 1Q19 %
Change
Net Sales $7,726 $7,535 2.5
Cost of products sold,
excluding amortization
expense 3,281 3,160 3.9
Amortization of intangible
assets 561 486 15.3
Research and development 578 672 (14.1) 1)
Selling, general, and
administrative 2,548 2,478 2.8
Total Operating Cost and
Expenses 6,968 6,796 2.5
Operating Earnings 758 739 2.6
Interest expense, net 121 148 (17.6)
Net foreign exchange (gain)
loss 5 6 (5.3)
Other (income) expense, net (1) (47) (97.1)
Earnings from Continuing
Operations before taxes 633 632 0.1
Tax expense (benefit) on
Earnings from Continuing
Operations 89 (40)
n/m 2)
Earnings from Continuing
Operations 544 672 (19.1)
Earnings from Discontinued
Operations, net of taxes 20
n/m
Net Earnings $564 $672 (16.0)
Earnings from Continuing
Operations, excluding
Specified Items, as described
below $1,162 $1,126 3.2
Diluted Earnings per Common
Share from:
Continuing Operations $0.30 $0.38 (21.1)
Discontinued Operations 0.01
n/m
Total $0.31 $0.38 (18.4)
Diluted Earnings per Common
Share from Continuing
Operations, excluding
Specified Items, as
described below $0.65 $0.63 3.2 3)
Average Number of Common
Shares Outstanding
Plus Dilutive Common Stock
Options 1,781 1,777
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 the first quarter of 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 $78 million reduction
of the transition tax associated
with the Tax Cuts and Jobs Act
(TCJA) and approximately $65
million in excess tax benefits
associated with share-based
compensation.
3) 2020 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $618 million,
or $0.35 per share, for intangible
amortization expense and other
expenses primarily associated with
acquisitions and restructuring
actions.
2019 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $454 million,
or $0.25 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
First Quarter Ended March 31, 2020 and 2019
(in millions, except per share data)
(unaudited)
1Q20
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization $561 $(561)
Gross Margin 3,884 599 $4,483 58.0%
R&D 578 (15) 563 7.3%
SG&A 2,548 (58) 2,490 32.2%
Other (income) expense, net (1) (42) (43)
Earnings from Continuing
Operations before taxes 633 714 1,347
Tax expense on Earnings from
Continuing Operations 89 96 185
Earnings from Continuing
Operations 544 618 1,162
Diluted Earnings per Share
from Continuing Operations $0.30 $0.35 $0.65
Specified items reflect intangible amortization expense of $561 million and other expenses of $153 million, primarily associated with acquisitions, restructuring
actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
1Q19
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization $486 $(486)
Gross Margin 3,889 527 $4,416 58.6%
R&D 672 (115) 557 7.4%
SG&A 2,478 (45) 2,433 32.3%
Other (income) expense, net (47) (13) (60)
Earnings from Continuing
Operations before taxes 632 700 1,332
Tax expense (benefit) on
Earnings from Continuing
Operations (40) 246 206
Earnings from Continuing
Operations 672 454 1,126
Diluted Earnings per Share
from Continuing Operations $0.38 $0.25 $0.63
Specified items reflect intangible amortization expense of $486 million and other expenses of $214 million, primarily associated with acquisitions, restructuring
actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
A reconciliation of the first-quarter tax rates for continuing operations for 2020 and 2019 is shown below:
1Q20
($
in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $633 $89 14.0%
Specified
items 714 96
Excluding
specified
items $1,347 $185 13.7%
1Q19
($
in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $632 (40) (6.3%) 1)
Specified
items 700 246
Excluding
specified
items $1,332 $206 15.5%
1) Reported tax rate on a GAAP basis
for the first quarter of 2019
includes the impact of a $78
million reduction of the transition
tax associated with the TCJA and
approximately $65 million in excess
tax benefits associated with share-
based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Quarter Ended March 31, 2020
(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 $23 $15 $561 $599
R&D (4) (6) $(5) (15)
SG&A (28) (30) (58)
Other (income) expense,
net 2 (44) (42)
Earnings from
Continuing Operations
before taxes $53 $51 $561 $49 714
Tax expense on Earnings
from Continuing
Operations (d) 96
Earnings from
Continuing Operations $618
Diluted Earnings per
Share from Continuing
Operations $0.35
The table above provides additional details
regarding the specified items described in
tables titled "Non-GAAP Reconciliation of
Financial Information From Continuing
Operations."
a) Acquisition-related expenses
include 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, 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 the
impairment of an investment.
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
First Quarter Ended March 31, 2019
(in millions, except per share data)
(unaudited)
Acquisition
Restructuring
Intangible
Other (c)
Total
or Divestiture and Cost Amortization Specifieds
-related (a) Reduction
Initiatives (b)
Gross Margin $19 $22 $486 $527
R&D (7) (5) $(103) (115)
SG&A (43) (2) (45)
Other (income) expense,
net (3) (10) (13)
Earnings from
Continuing Operations
before taxes $72 $29 $486 $113 700
Tax expense on Earnings
from Continuing
Operations (d) 246
Earnings from
Continuing Operations $454
Diluted Earnings per
Share from Continuing
Operations $0.25
The table above provides additional details
regarding the specified items described in
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 expense relates to the
acquisition of an R&D asset and
charges related to the impairment
of certain assets.
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.
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SOURCE Abbott
