Abbott Reports Third-Quarter 2020 Results; Achieves Strong Double-Digit Earnings Growth and Raises Guidance
ABBOTT PARK, Ill., Oct. 21, 2020 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the third quarter ended Sept. 30, 2020.
-- Third-quarter worldwide sales of $8.9 billion increased 9.6 percent on a
reported basis and 10.6 percent on an organic basis, which excludes the
impact of foreign exchange.
-- Reported diluted EPS from continuing operations under GAAP was $0.69 and
adjusted diluted EPS from continuing operations, which excludes
specified items, was $0.98, reflecting 16.7 percent growth versus the
prior year.(1)
-- Abbott projects full-year 2020 diluted EPS from continuing operations on
a GAAP basis of at least $2.35 and full-year adjusted diluted EPS from
continuing operations of at least $3.55.
-- In August, Abbott received FDA Emergency Use Authorization for its
BinaxNOW((TM)) COVID-19 Ag Card rapid test for the detection of COVID-19
infection. The test delivers results in just 15 minutes with no
instrumentation required. Abbott is selling the test for $5 and offers a
complementary mobile phone app, called NAVICA((TM)), that allows people
who test negative to display their result.
-- During the quarter, Abbott launched FreeStyle Libre(®) 2 and obtained
CE Mark for FreeStyle Libre 3, which automatically delivers
up-to-the-minute glucose readings, unsurpassed 14-day accuracy(2) and
real-time glucose alarms in the world's smallest and thinnest(3)
wearable sensor at the same affordable price(4) as previous versions.
Abbott also announced CE Mark for its Libre Sense Glucose Sport
Biosensor, which helps athletes better understand the efficacy of their
nutritional choices on training and athletic performance.
-- In September, Abbott obtained CE Mark for MitraClip(® )G4, its
next-generation MitraClip heart device, the leading minimally invasive
mitral valve repair device in the world.
"Our strong results and increased guidance are a direct reflection of our ability to innovate and deliver despite challenging conditions," said Robert B. Ford, president and chief executive officer, Abbott. "Our new product pipeline continues to be highly productive, and we're well-positioned to finish the year with a lot of momentum."
THIRD-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business. Organic sales growth excludes the impact of foreign exchange.
Following are sales by business segment and commentary for the third quarter 2020:
Total Company
($ in millions)
% Change vs. 3Q19
Sales 3Q20 Reported
Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total * 3,329 5,524 8,853 17.4 5.4 9.6 17.4 7.0 10.6
Nutrition 818 1,106 1,924 3.7 1.9 2.6 3.7 4.4 4.1
Diagnostics 1,133 1,507 2,640 61.4 24.8 38.2 61.4 25.6 38.8
Established Pharmaceuticals 1,099 1,099
n/a (9.3) (9.3)
n/a (3.3) (3.3)
Medical Devices 1,363 1,807 3,170 2.2 4.4 3.4 2.2 2.9 2.6
* Total Q3 2020 Abbott sales from continuing operations include Other Sales of approximately $20 million.
% Change vs. 9M19
Sales 9M20 Reported
Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total * 8,823 15,084 23,907 4.6 (0.4) 1.3 4.6 2.4 3.2
Nutrition 2,438 3,273 5,711 5.0 1.7 3.1 5.0 4.6 4.8
Diagnostics 2,793 3,667 6,460 31.6 3.8 14.2 31.6 6.1 15.7
Established Pharmaceuticals 3,156 3,156
n/a (4.7) (4.7)
n/a 1.3 1.3
Medical Devices 3,562 4,968 8,530 (10.3) (1.9) (5.6) (10.3) (0.8) (5.0)
* Total 9M 2020 Abbott sales from
continuing operations include
Other Sales of approximately $50
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.
Third-quarter 2020 worldwide sales of $8.9 billion increased 9.6 percent on a reported basis and 10.6 percent on an organic basis.
Nutrition
($ in millions)
% Change vs. 3Q19
Sales 3Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 818 1,106 1,924 3.7 1.9 2.6 3.7 4.4 4.1
Pediatric 488 518 1,006 1.9 (8.3) (3.7) 1.9 (6.2) (2.5)
Adult 330 588 918 6.5 13.0 10.6 6.5 16.0 12.4
% Change vs. 9M19
Sales 9M20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 2,438 3,273 5,711 5.0 1.7 3.1 5.0 4.6 4.8
Pediatric 1,490 1,629 3,119 5.9 (5.2) (0.2) 5.9 (2.7) 1.2
Adult 948 1,644 2,592 3.7 9.5 7.3 3.7 13.0 9.5
Worldwide Nutrition sales increased 2.6 percent on a reported basis and 4.1 percent on an organic basis in the third quarter. Strong U.S. and international sales performance of Ensure(®), Abbott's market-leading complete and balanced nutrition brand, led to global Adult Nutrition sales growth of 10.6 percent on a reported basis and 12.4 percent on an organic basis. In Pediatric Nutrition, U.S. sales were led by growth of Pedialyte(®), Abbott's oral rehydration brand, and PediaSure(®). Internationally, Pediatric Nutrition growth in Southeast Asia was offset by challenging conditions in Greater China.
Diagnostics
($ in millions)
% Change vs. 3Q19
Sales 3Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,133 1,507 2,640 61.4 24.8 38.2 61.4 25.6 38.8
Core Laboratory 284 892 1,176 4.6 (1.5) (0.1) 4.6 (0.3) 0.8
Molecular 220 238 458 536.1 211.9 313.1 536.1 212.7 313.6
Point of Care 96 35 131 (15.2) 10.6 (9.6) (15.2) 9.8 (9.7)
Rapid Diagnostics 533 342 875 88.3 75.9 83.2 88.3 75.3 83.0
% Change vs. 9M19
Sales 9M20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 2,793 3,667 6,460 31.6 3.8 14.2 31.6 6.1 15.7
Core Laboratory 840 2,312 3,152 5.9 (11.6) (7.5) 5.9 (9.2) (5.7)
Molecular 429 527 956 279.5 147.2 193.0 279.5 152.1 196.2
Point of Care 278 109 387 (17.1) 22.4 (8.8) (17.1) 23.8 (8.5)
Rapid Diagnostics 1,246 719 1,965 41.5 16.4 31.1 41.5 18.3 31.9
Worldwide Diagnostics sales increased 38.2 percent on a reported basis in the third quarter and increased 38.8 percent on an organic basis. Strong growth in the quarter was driven by demand for Abbott's portfolio of COVID-19 diagnostics tests on its lab-based immunoassay and molecular diagnostics systems and point-of-care rapid testing platforms. Global COVID-19 testing-related sales were $881 million in the quarter.
Established Pharmaceuticals
($ in millions)
% Change vs. 3Q19
Sales 3Q20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,099 1,099
n/a (9.3) (9.3)
n/a (3.3) (3.3)
Key Emerging Markets 799 799
n/a (10.3) (10.3)
n/a (1.8) (1.8)
Other 300 300
n/a (6.3) (6.3)
n/a (7.7) (7.7)
% Change vs. 9M19
Sales 9M20 Reported Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 3,156 3,156
n/a (4.7) (4.7)
n/a 1.3 1.3
Key Emerging Markets 2,376 2,376
n/a (4.8) (4.8)
n/a 3.2 3.2
Other 780 780
n/a (4.4) (4.4)
n/a (4.3) (4.3)
Established Pharmaceuticals sales decreased 9.3 percent on a reported basis in the third quarter and decreased 3.3 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 decreased 10.3 percent on a reported basis in the quarter and decreased 1.8 percent on an organic basis primarily due to market softness across several countries as a result of the spread of COVID-19.
Medical Devices
($ in millions)
% Change vs. 3Q19
Sales 3Q20 Reported
Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 1,363 1,807 3,170 2.2 4.4 3.4 2.2 2.9 2.6
Rhythm Management 242 265 507 (8.7) (2.7) (5.7) (8.7) (4.1) (6.4)
Electrophysiology 192 249 441 4.1 3.0 3.5 4.1 1.8 2.8
Heart Failure 144 46 190 5.7 (8.6) 1.8 5.7 (10.1) 1.4
Vascular 230 400 630 (8.3) (10.4) (9.7) (8.3) (11.2) (10.2)
Structural Heart 159 194 353 1.0 1.9 1.5 1.0 0.4
Neuromodulation 170 36 206 2.8 (7.7) 0.8 2.8 (9.5) 0.4
Diabetes Care 226 617 843 29.6 25.9 26.9 29.6 23.6 25.2
Vascular Product Lines:
Coronary and Endovasculara 209 398 607 (8.5) (10.1) (9.6) (8.5) (10.9) (10.1)
a) Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.
% Change vs. 9M19
Sales 9M20 Reported
Organic
U.S. Int'l Total U.S. Int'l Total U.S. Int'l Total
Total 3,562 4,968 8,530 (10.3) (1.9) (5.6) (10.3) (0.8) (5.0)
Rhythm Management 655 727 1,382 (17.1) (10.2) (13.6) (17.1) (9.1) (13.0)
Electrophysiology 476 652 1,128 (13.4) (8.5) (10.6) (13.4) (8.0) (10.3)
Heart Failure 411 140 551 (4.1) (1.9) (3.5) (4.1) (1.0) (3.3)
Vascular 628 1,108 1,736 (20.1) (17.9) (18.7) (20.1) (16.9) (18.1)
Structural Heart 386 508 894 (13.4) (12.2) (12.7) (13.4) (11.5) (12.3)
Neuromodulation 392 97 489 (19.3) (21.6) (19.7) (19.3) (20.2) (19.5)
Diabetes Care 614 1,736 2,350 26.7 28.8 28.2 26.7 30.4 29.4
Vascular Product Lines:
Coronary and Endovasculara 575 1,101 1,676 (18.7) (17.9) (18.2) (18.7) (16.9) (17.5)
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 3.4 percent on a reported basis in the third quarter and increased 2.6 percent on an organic basis. Sales growth and procedure volume trends across Abbott's cardiovascular and neuromodulation business areas improved significantly versus the prior quarter as demand continues to return to more normalized levels.
In Diabetes Care, strong growth was led by FreeStyle Libre, which grew 37.9 percent on a reported basis and 35.6 percent on an organic basis. In September, Abbott obtained CE Mark for its FreeStyle Libre 3 system, which automatically delivers real-time, up-to-the-minute glucose readings, unsurpassed 14-day accuracy(2) and real-time glucose alarms in the world's smallest and thinnest(3) wearable sensor at the same affordable price(4) as previous versions. Abbott also obtained CE Mark for its Libre Sense Glucose Sport Biosensor in Europe. Libre Sense is a consumer over-the-counter product that provides continuous glucose monitoring for athletes to better understand the efficacy of their nutrition choices on training and athletic performance.
ABBOTT'S GUIDANCE FOR 2020
Abbott projects full-year 2020 diluted earnings per share from continuing operations under GAAP of at least $2.35. Abbott forecasts specified items for the full-year 2020 of $1.20 primarily related to intangible amortization, acquisition-related expenses, restructuring and cost reduction initiatives and other net expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be at least $3.55 for full-year 2020.
ABBOTT DECLARES 387(TH) CONSECUTIVE QUARTERLY DIVIDEND
On Sept. 17, 2020, the board of directors of Abbott declared the company's quarterly dividend of $0.36 per share. Abbott's cash dividend is payable Nov. 16, 2020, to shareholders of record at the close of business on Oct. 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.
Abbott will live webcast its third-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 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" in our Annual Report on Form 10-K for the year ended Dec. 31, 2019 and in Item 1A, "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and are incorporated herein 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 Third-quarter 2020 diluted EPS from
continuing operations on a GAAP basis
reflects 30.2 percent growth.
2 Alva Shridhara, Timothy Bailey, Ronald
Brazg, Erwin S. Budiman, Kristin Castorino,
Mark P. Christiansen, Gregory Forlenza,
Mark Kipnes, David R. Liljenquist, and
Hanqing Liu. "Accuracy of a 14-Day
Factory-Calibrated Continuous Glucose
Monitoring System With Advanced Algorithm
in Pediatric and Adult Population With
Diabetes." Journal of Diabetes Science and
Technology, (September 2020). https://
doi.org/10.1177/1932296820958754.
3 Among patient-applied sensors. Data on
File, Abbott Diabetes Care.
4 Based on a comparison of list prices of the
FreeStyle Libre portfolio versus competitor
CGM systems available worldwide. The actual
cost to patients may or may not be lower
than other CGM systems, depending on local
reimbursement, if any.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Third Quarter Ended September 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
3Q20 3Q19 %
Change
Net Sales $8,853 $8,076 9.6
Cost of products sold,
excluding amortization expense 3,966 3,358 18.1
Amortization of intangible
assets 510 484 5.3
Research and development 580 596 (2.8)
Selling, general, and
administrative 2,302 2,440 (5.7)
Total Operating Cost and
Expenses 7,358 6,878 7.0
Operating Earnings 1,495 1,198 24.8
Interest expense, net 127 143 (11.2)
Net foreign exchange (gain)
loss (7) 7
n/m
Other (income) expense, net (46) (55) (16.4)
Earnings from Continuing
Operations before taxes 1,421 1,103 28.9
Tax expense on Earnings from
Continuing Operations 189 143 31.7 1)
Earnings from Continuing
Operations 1,232 960 28.5
Earnings from Discontinued
Operations, net of taxes
n/m
Net Earnings $1,232 $960 28.5
Earnings from Continuing
Operations, excluding
Specified Items, as described
below $1,760 $1,514 16.2 2)
Diluted Earnings per Common
Share from:
Continuing Operations $0.69 $0.53 30.2
Discontinued Operations
n/m
Total $0.69 $0.53 30.2
Diluted Earnings per Common
Share from Continuing
Operations, excluding Specified
Items, as described below $0.98 $0.84 16.7 2)
Average Number of Common Shares
Outstanding
Plus Dilutive Common Stock
Options 1,788 1,784
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) 2020 Tax expense on Earnings from Continuing
Operations includes the recognition of
approximately $20 million in excess tax
benefits associated with share-based
compensation.
2) 2020 Net Earnings and Diluted Earnings per
Common Share from Continuing Operations,
excluding Specified Items, excludes net
after-tax charges of $528 million, or
$0.29 per share, for intangible
amortization and impairment expenses and
other net expenses primarily associated
with acquisitions, restructuring actions
and income from a litigation settlement.
2019 Net Earnings and Diluted Earnings per
Common Share from Continuing Operations,
excluding Specified Items, excludes net
after-tax charges of $554 million, or
$0.31 per share, for intangible
amortization expense and other expenses
primarily associated with acquisitions and
restructuring actions.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Nine Months Ended September 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
9M20 9M19 %
Change
Net Sales $23,907 $23,590 1.3
Cost of products sold,
excluding amortization expense 10,510 9,797 7.3
Amortization of intangible
assets 1,624 1,453 11.8
Research and development 1,722 1,845 (6.7) 1)
Selling, general, and
administrative 7,126 7,352 (3.1)
Total Operating Cost and
Expenses 20,982 20,447 2.6
Operating Earnings 2,925 3,143 (6.9)
Interest expense, net 373 437 (14.8)
Net foreign exchange (gain)
loss (3) 9
n/m
Other (income) expense, net (25) (140) (82.2)
Earnings from Continuing
Operations before taxes 2,580 2,837 (9.0)
Tax expense on Earnings from
Continuing Operations 267 199 34.1 2)
Earnings from Continuing
Operations 2,313 2,638 (12.3)
Earnings from Discontinued
Operations, net of taxes 20
n/m
Net Earnings $2,333 $2,638 (11.5)
Earnings from Continuing
Operations, excluding
Specified Items, as described
below $3,940 $4,105 (4.0) 3)
Diluted Earnings per Common
Share from:
Continuing Operations $1.29 $1.47 (12.2)
Discontinued Operations 0.01
n/m
Total $1.30 $1.47 (11.6)
Diluted Earnings per Common
Share from Continuing
Operations, excluding Specified
Items, as described below $2.20 $2.29 (3.9) 3)
Average Number of Common Shares
Outstanding
Plus Dilutive Common Stock
Options 1,785 1,781
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 nine months 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) 2020 Tax expense on Earnings from
Continuing Operations includes the
recognition of approximately $80
million of net tax benefits as a
result of the resolution of various
tax positions related to prior
years and approximately $87 million
in excess tax benefits associated
with share-based compensation.
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 $95
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 $1.627
billion, or $0.91 per share, for
intangible amortization expense,
impairment charges and other net
expense primarily associated with
acquisitions, restructuring actions
and income from a litigation
settlement.
2019 Net Earnings and Diluted
Earnings per Common Share from
Continuing Operations, excluding
Specified Items, excludes net
after-tax charges of $1.467
billion, or $0.82 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
Third Quarter Ended September 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
3Q20
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization $510 $(510)
$ --
Gross Margin 4,377 705 5,082 57.4%
R&D 580 (21) 559 6.3%
SG&A 2,302 63 2,365 26.7%
Other (income) expense, net (46) (1) (47)
Earnings from Continuing Operations before taxes 1,421 664 2,085
Tax expense on Earnings from Continuing Operations 189 136 325
Earnings from Continuing Operations 1,232 528 1,760
Diluted Earnings per Share from Continuing Operations $0.69 $0.29 $0.98
Specified items reflect intangible amortization expense of $510 million and other net expenses of $154 million, primarily associated with acquisitions, restructuring actions, other expenses and litigation settlement income. See tables titled "Details of Specified
Items" for additional details regarding specified items.
3Q19
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization $484 $(484)
$ --
Gross Margin 4,234 546 4,780 59.2%
R&D 596 (32) 564 7.0%
SG&A 2,440 (87) 2,353 29.1%
Other (income) expense, net (55) (3) (58)
Earnings from Continuing Operations before taxes 1,103 668 1,771
Tax expense on Earnings from Continuing Operations 143 114 257
Earnings from Continuing Operations 960 554 1,514
Diluted Earnings per Share from Continuing Operations $0.53 $0.31 $0.84
Specified items reflect intangible amortization expense of $484 million and other expenses of $184 million, primarily associated with acquisitions, restructuring actions and other expenses. 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
Nine Months Ended September 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
9M20
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization $1,624 $(1,624)
$ --
Gross Margin 11,773 1,895 13,668 57.2%
R&D 1,722 (64) 1,658 6.9%
SG&A 7,126 (19) 7,107 29.7%
Other (income) expense, net (25) (111) (136)
Earnings from Continuing Operations before taxes 2,580 2,089 4,669
Tax expense on Earnings from Continuing Operations 267 462 729
Earnings from Continuing Operations 2,313 1,627 3,940
Diluted Earnings per Share from Continuing Operations $1.29 $0.91 $2.20
Specified items reflect intangible amortization expense of $1.624 billion and other net expenses of $465 million, primarily associated with acquisitions, restructuring actions, other expenses and litigation settlement income. See tables titled "Details of Specified
Items" for additional details regarding specified items.
9M19
As Specified
As % to
Reported Items Adjusted Sales
(GAAP)
Intangible Amortization $1,453 $(1,453)
$ --
Gross Margin 12,340 1,595 13,935 59.1%
R&D 1,845 (159) 1,686 7.1%
SG&A 7,352 (178) 7,174 30.4%
Other (income) expense, net (140) (32) (172)
Earnings from Continuing Operations before taxes 2,837 1,964 4,801
Tax expense on Earnings from Continuing Operations 199 497 696
Earnings from Continuing Operations 2,638 1,467 4,105
Diluted Earnings per Share from Continuing Operations $1.47 $0.82 $2.29
Specified items reflect intangible amortization expense of $1.453 billion and other expenses of $511 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details
regarding specified items.
A reconciliation of the third-quarter tax rates for continuing operations for 2020 and 2019 is shown below:
3Q20
($
in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $1,421 $189 13.3%
Specified
items 664 136
Excluding
specified
items $2,085 $325 15.6%
3Q19
($
in
millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As
reported
(GAAP) $1,103 $143 13.0%
Specified
items 668 114
Excluding
specified
items $1,771 $257 14.5%
1) 2020 Tax expense on Earnings from
Continuing Operations includes the
recognition of approximately $20
million in excess tax benefits
associated with share-based
compensation.
A reconciliation of the year-to-date tax rates for continuing operations for 2020 and 2019 is shown below:
9M20
($ in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As reported (GAAP) $2,580 $267 10.4% 2)
Specified items 2,089 462
Excluding specified items $4,669 $729 15.6%
9M19
($ in millions) Pre-Tax Taxes on Tax
Income Earnings Rate
As reported (GAAP) $2,837 $199 7.0% 3)
Specified items 1,964 497
Excluding specified items $4,801 $696 14.5%
2) 2020 Tax expense on Earnings from Continuing
Operations includes the recognition of
approximately $80 million of net tax
benefits as a result of the resolution of
various tax positions related to prior
years and approximately $87 million in
excess tax benefits associated with share-
based compensation.
3) Reported tax rate on a GAAP basis for 2019
includes the impact of a $78 million
reduction of the transition tax associated
with the TCJA and approximately $95 million
in excess tax benefits associated with
share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Third Quarter Ended September 30, 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 $16 $27 $510 $152 $705
R&D (1) (1) (19) (21)
SG&A (28) (9) 100 63
Other (income) expense, net (2) 1 (1)
Earnings from Continuing Operations before taxes $47 $37 $510 $70 664
Tax expense on Earnings from Continuing Operations (d) 136
Earnings from Continuing Operations $528
Diluted Earnings per Share from Continuing Operations $0.29
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 integration costs, which
represent incremental costs
directly related to integrating the
acquired businesses and include
expenditures for retention 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 intangible asset
and the costs to acquire R&D
assets, partially offset by income
from the settlement of litigation.
d) Reflects the net tax benefit
associated with the specified
items, the resolution of prior
years' tax positions and excess tax
benefits associated with share-
based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Third Quarter Ended September 30, 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 $32 $30 $484
$ -- $546
R&D (9) (12) (11) (32)
SG&A (27) (43) (17) (87)
Other (income) expense, net (3) (3)
Earnings from Continuing Operations before taxes $68 $85 $484 $31 668
Tax expense on Earnings from Continuing Operations (d) 114
Earnings from Continuing Operations $554
Diluted Earnings per Share from Continuing Operations $0.31
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, 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 primarily relates to expenses
related to certain litigation
settlements and the acquisition of
an R&D asset.
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
Nine Months Ended September 30, 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 $61 $57 $1,624 $153 $1,895
R&D (8) (9) (47) (64)
SG&A (83) (36) 100 (19)
Other (income) expense, net (3) (108) (111)
Earnings from Continuing Operations before taxes $155 $102 $1,624 $208 2,089
Tax expense on Earnings from Continuing Operations (d) 462
Earnings from Continuing Operations $1,627
Diluted Earnings per Share from Continuing Operations $0.91
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 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
impairment charges related to
certain assets and the costs to
acquire R&D assets, partially
offset by income from the
settlement of litigation.
d) Reflects the net tax benefit
associated with the specified
items, the resolution of prior
years' tax positions and excess tax
benefits associated with share-
based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Nine Months Ended September 30, 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 $69 $73 $1,453
$ -- $1,595
R&D (23) (22) (114) (159)
SG&A (114) (47) (17) (178)
Other (income) expense, net (10) (22) (32)
Earnings from Continuing Operations before taxes $216 $142 $1,453 $153 1,964
Tax expense on Earnings from Continuing Operations (d) 497
Earnings from Continuing Operations $1,467
Diluted Earnings per Share from Continuing Operations $0.82
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, 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 relates to the acquisition of
an R&D asset, 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.
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SOURCE Abbott
