Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Abbott Laboratories (ABT, Financial) reported organic sales growth of more than 9%, excluding COVID testing sales.
- Adjusted earnings per share of $1.14 exceeded analyst consensus estimates and represents a 16% sequential increase from the first quarter.
- The company raised its full-year guidance, now forecasting organic sales growth of 9.5% to 10% and adjusted earnings per share in the range of $4.61 to $4.71.
- Strong performance in medical devices with 12% sales growth, led by 20% growth in FreeStyle Libre sales.
- Gross margin expansion driven by supply chain execution, lower commodity costs, and favorable sales mix.
Negative Points
- Foreign exchange had an unfavorable year-over-year impact of 3.5% on second-quarter sales.
- Litigation regarding Preterm Infant formula and Human milk Fortify could pose a risk, despite the company's strong defense.
- The company faces competitive pressures in the diagnostics and medical devices sectors.
- The impact of COVID testing sales continues to decline, affecting overall revenue growth.
- Challenges in the US Pediatric Nutrition segment due to competitive activity.
Q & A Highlights
Q: Robert, congratulations on a nice quarter. Can you provide more details on the net litigation?
A: I believe I covered everything in my prepared comments. This issue is overblown in terms of its impact. We are defending our position and working with stakeholders to keep them informed.
Q: Your EP business grew 17% in the second quarter. What drove that growth, and how sustainable is it?
A: The market has accelerated, growing above 20%. Our growth is driven by increased market adoption and our strong position in mapping and procedures. We expect this growth to continue, especially with our upcoming PFA portfolio.
Q: Structural heart growth accelerated this quarter. How much of that is due to MitraClip recovery and new products like TriClip and Amulet?
A: TriClip's launch was significant, but growth is broad-based across our portfolio. Navigator and Amulet have shown strong performance, and MitraClip continues to grow internationally. We expect continued growth in structural heart.
Q: How are you segmenting the market with Lingo versus Rio, and what are the market dynamics for Libre?
A: Libre continues to perform well with significant growth opportunities. Lingo and Libre Rio aim to expand sensor technology use across different diabetes populations and non-diabetics. We see a large market opportunity, especially in the US and Western Europe.
Q: How are you thinking about advertising and data generation for new products like Lingo in the OTC market?
A: We will focus on direct consumer communication and personalized data insights. While TV advertising is important, on-the-ground marketing and data generation will be crucial for educating consumers and healthcare professionals.
Q: Can you elaborate on the potential of Aveir and leadless pacing, especially with dual chamber coverage?
A: Aveir is transforming our CRM business, which has grown 7% this year. Dual chamber pacing is a significant opportunity, and we are focusing on training and expanding physician coverage to drive adoption.
Q: Abbott has been delivering top-tier organic revenue growth. Can you sustain this growth without relying on M&A?
A: Yes, we believe we can continue delivering top-tier growth through our strong portfolio and pipeline. M&A could add further growth, but our strategy is primarily focused on organic growth.
Q: How do you view the strategic fit of Abbott's four major business units, and is there potential for spins?
A: We continuously evaluate our portfolio. All four segments are performing well, delivering market-leading growth. We like the diversity and believe it provides both defense and offense capabilities.
Q: What are the drivers for margin expansion and earnings growth in the second half of the year?
A: Margin expansion is driven by portfolio contributions, productivity improvements, and stabilizing commodity costs. We expect these factors to continue contributing to margin expansion and earnings growth.
Q: Can you elaborate on Abbott's strategy for biosimilars and the market opportunity?
A: Our strategy focuses on bringing biologics to emerging markets through partnerships. We aim to expand the category and meet patient needs. We expect to launch biosimilars starting in 2025, with significant opportunities in oncology and other areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
