Abbott Reports First-Quarter 2018 Results

ABBOTT PARK, Ill., April 18, 2018 /PRNewswire/ -- Abbott  (NYSE: ABT) today announced financial results for the first quarter ended March 31, 2018.

  • First-quarter worldwide sales of $7.4 billion increased 16.7 percent on a reported basis and 6.9 percent on an organic* basis.
  • Reported diluted EPS from continuing operations under GAAP was $0.23 in the first quarter.
  • Adjusted diluted EPS from continuing operations, which excludes specified items, was $0.59, at the upper end of Abbott's previous guidance range.
  • Abbott projects full-year 2018 diluted EPS from continuing operations of $1.23 to $1.33 on a GAAP basis1. Projected full-year adjusted diluted EPS from continuing operations remains $2.80 to $2.90, reflecting 14.0 percent growth at the midpoint.
  • In January, Abbott announced U.S. FDA approval for magnetic resonance (MR)-conditional labeling for its Quadra AssuraTM and Quadra Assura MPTM cardiac resynchronization therapy defibrillator (CRT-D) devices and its Fortify AssuraTM implantable cardioverter defibrillator (ICD). With these approvals, Abbott has MR-conditional labeling for its suite of pacemaker, ICD and CRT-D devices.
  • In January, Abbott announced that FreeStyle® Libre, Abbott's revolutionary sensor-based continuous glucose monitoring system, is now available and approved for coverage by the U.S. Center for Medicare and Medicaid Services.
  • In March, Abbott announced clinical trial data from the MOMENTUM 3 study, which demonstrated that its HeartMate 3TM left ventricular assist device (LVAD) improved survival and clinical outcomes at two years for patients with advanced heart failure. The trial data will be submitted to the U.S. FDA to support consideration to expand the current HeartMate 3 indication to include long-term use.

"We're off to a strong start to the year as we forecasted," said Miles D. White, chairman and chief executive officer, Abbott. "We're particularly pleased with the continued strong growth in Medical Devices and improving performance in our Nutrition business."

* See note on organic growth below.

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 prior year results for the Abbott Medical Optics (AMO) and St. Jude Medical vascular closure businesses, which were divested during the first quarter 2017;
  • Excludes the current and prior year results for Rapid Diagnostics, which reflect results for Alere Inc., which was acquired on Oct. 3, 2017; and
  • Excludes the impact of foreign exchange.

Following are sales by business segment and commentary for the first quarter:

    Total Company
    -------------

    ($ in millions)


                                                                                                    % Change vs. 1Q17
                                                                                                    -----------------

                                  Sales 1Q18                Reported                   Organic
                                ----------               --------                 -------

                                U.S.         Int'l                   Total                  U.S.                   Int'l       Total       U.S.       Int'l        Total
                                ----         -----                   -----                                         -----       -----                  -----        -----

    Total *                           2,675         4,715                   7,390                15.1                     17.6        16.7        5.0          8.0          6.9
                                      -----         -----                   -----                ----                     ----        ----        ---          ---          ---

    Nutrition                           758           998                   1,756                 3.8                      9.5         7.0        3.8          5.5          4.7

    Diagnostics                         700         1,137                   1,837                89.2                     44.3        58.7        1.8          7.3          5.5

    Established Pharmaceuticals          --        1,044                   1,044                 n/a                     9.9         9.9        n/a         6.8          6.8

    Medical Devices                   1,209         1,535                   2,744                 6.4                     22.0        14.6        6.9         11.7          9.4

    * Total 2018 Abbott sales from
     continuing operations include
     Other Sales of $9 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 2018 worldwide sales of $7.4 billion increased 16.7 percent on a reported basis. On an organic basis, worldwide sales increased 6.9 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.

    Nutrition
    ---------

    ($ in millions)


                                                                                   % Change vs. 1Q17
                                                                                   -----------------

                      Sales 1Q18             Reported                  Organic
                    ----------            --------                -------

                    U.S.         Int'l                Total                 U.S.                  Int'l      Total     U.S.     Int'l     Total
                    ----         -----                -----                                       -----      -----              -----     -----

    Total                 758          998                  1,756                3.8                     9.5       7.0      3.8       5.5       4.7
                          ---          ---                  -----                ---                     ---       ---      ---       ---       ---

    Pediatric             448          546                    994                3.7                    10.5       7.3      3.7       6.3       5.1

    Adult                 310          452                    762                4.0                     8.4       6.6      4.0       4.4       4.3

Worldwide Nutrition sales increased 7.0 percent on a reported basis in the first quarter, including a favorable 2.3 percent effect of foreign exchange, and increased 4.7 percent on an organic basis.

Worldwide Pediatric Nutrition sales increased 7.3 percent on a reported basis in the first quarter, including a favorable 2.2 percent effect of foreign exchange, and increased 5.1 percent on an organic basis. International sales increased 10.5 percent on a reported basis, including a favorable 4.2 percent effect of foreign exchange, and increased 6.3 percent on an organic basis, which was led by strong growth across several countries in Asia, including Greater China. In the U.S., continued above-market growth was led by market share gains in the infant nutrition category.

Worldwide Adult Nutrition sales increased 6.6 percent on a reported basis in the first quarter, including a favorable 2.3 percent effect of foreign exchange, and increased 4.3 percent on an organic basis. Worldwide sales growth was led by 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. 1Q17
                                                                          -----------------

                          Sales 1Q18             Reported              Organic
                          ----------             --------              -------

                        U.S.         Int'l            Total       U.S.                      Int'l       Total       U.S.         Int'l         Total
                        ----         -----            -----                                 -----       -----                    -----         -----

    Total *                   700          1,137            1,837          89.2                    44.3        58.7          1.8           7.3            5.5
                              ---          -----            -----          ----                    ----        ----          ---           ---            ---

    Core Laboratory           228            791            1,019           5.6                    13.8        11.9          5.6           6.5            6.3

    Molecular                  39             79              118        (13.8)                   17.5         5.0       (13.8)         11.4            1.3

    Point of Care             110             31              141           0.6                    23.0         4.8          0.6          18.6            4.0

    Rapid Diagnostics *       323            236              559           n/m                    n/m        n/m         n/m          n/m           n/m

    * Rapid Diagnostics reflects
     sales from Alere Inc., which
     was acquired on Oct. 3, 2017.
     Organic growth rates above
     exclude results from the
     Rapid Diagnostics business.


    n/m = Percent change is not
     meaningful.

Worldwide Diagnostics sales increased 58.7 percent on a reported basis in the first quarter. On an organic basis, sales increased 5.5 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.

Core Laboratory Diagnostics sales increased 11.9 percent on a reported basis in the first quarter, including a favorable 5.6 percent effect of foreign exchange, and increased 6.3 percent on an organic basis, reflecting continued above-market growth driven by share gains in the U.S. and internationally.

Molecular Diagnostics sales increased 5.0 percent on a reported basis in the first quarter, including a favorable 3.7 percent effect of foreign exchange, and increased 1.3 percent on an organic basis. As expected, strong growth in infectious disease testing, Abbott's core area of focus in the molecular diagnostics market, was partially offset by a planned scale down in other testing areas, primarily in the U.S.

Point of Care Diagnostics sales increased 4.8 percent on a reported basis in the first quarter, including a favorable 0.8 percent effect of foreign exchange, and increased 4.0 percent on an organic basis, led by strong international growth of Abbott's i-STAT® handheld system.

Rapid Diagnostics worldwide sales of $559 million were led by infectious disease testing, including strong flu and strep testing volumes in the U.S.

    Established Pharmaceuticals
    ---------------------------

    ($ in millions)


                                                                                                    % Change vs. 1Q17
                                                                                                    -----------------

                                  Sales 1Q18                Reported                  Organic
                                ----------               --------                -------

                                U.S.         Int'l                   Total                 U.S.                    Int'l      Total      U.S.      Int'l     Total
                                ----         -----                   -----                                         -----      -----                -----     -----

    Total                              --          1,044                   1,044                 n/a                      9.9        9.9       n/a       6.8       6.8
                                      ---          -----                   -----                ----                      ---        ---      ----       ---       ---

    Key Emerging
     Markets                           --            793                     793                 n/a                      8.7        8.7       n/a       6.8       6.8

    Other                              --            251                     251                 n/a                     13.9       13.9       n/a       6.6       6.6

Established Pharmaceuticals sales increased 9.9 percent on a reported basis in the first quarter, including a favorable 3.1 percent effect of foreign exchange, and increased 6.8 percent on an organic basis.

Key Emerging Markets comprise several countries that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these geographies increased 8.7 percent on a reported basis in the first quarter, including a favorable 1.9 percent effect of foreign exchange, and increased 6.8 percent on an organic basis. Sales growth was led by double-digit growth across several geographies, including India, China and Brazil.

    Medical Devices
    ---------------

    ($ in millions)


                                                                                                           % Change vs. 1Q17
                                                                                                           -----------------

                                         Sales 1Q18               Reported                  Organic
                                       ----------              --------                -------

                                       U.S.         Int'l                  Total                 U.S.                      Int'l       Total      U.S.        Int'l       Total
                                       ----         -----                  -----                                           -----       -----                  -----       -----

    Total                                    1,209        1,535                  2,744                  6.4                       22.0       14.6         6.9        11.7         9.4
                                             -----        -----                  -----                  ---                       ----       ----         ---        ----         ---

    Cardiovascular and Neuromodulation       1,123        1,200                  2,323                  5.8                       15.2       10.5         6.4         6.0         6.2

    Rhythm Management                          264          271                    535                  1.3                        8.3        4.7         1.3       (1.2)          -

    Electrophysiology                          182          209                    391                 25.8                       22.1       23.8        25.8        12.5        18.6

    Heart Failure                              114           39                    153                  4.3                       17.0        7.3         4.3         6.7         4.8

    Vascular                                   286          453                    739                (6.0)                      13.7        5.2       (4.1)        5.9         1.6

    Structural Heart                           109          184                    293                  1.9                       23.4       14.5         1.9        11.5         7.5

    Neuromodulation                            168           44                    212                 23.6                       13.0       21.3        23.6         2.0        18.8

    Diabetes Care                               86          335                    421                 14.5                       54.5       44.2        14.5        39.2        32.9

Worldwide Medical Devices sales increased 14.6 percent on a reported basis in the first quarter. On an organic basis, sales increased 9.4 percent. Refer to tables titled "Non-GAAP Reconciliation of Adjusted Historical Revenue" for a reconciliation of adjusted historical revenue.

In Cardiovascular and Neuromodulation, worldwide sales growth in the first quarter was led by double-digit growth in Electrophysiology and Neuromodulation. Growth in Electrophysiology includes share gains from the recent U.S. launch of Abbott's Confirm RxTM Insertable Cardiac Monitor (ICM), the world's first and only smartphone-compatible ICM designed to help physicians remotely identify cardiac arrhythmias. In Heart Failure, sales growth was led by market uptake of Abbott's HeartMate 3 system. In the quarter, Abbott announced clinical trial data from the MOMENTUM 3 study demonstrating that its HeartMate 3 LVAD improved survival and clinical outcomes at 2 years for patients with advanced heart failure. The trial data will be submitted to the U.S. FDA to support consideration to expand the current HeartMate 3 indication to include long-term use. Growth in Structural Heart was driven by MitraClip®, Abbott's market-leading device for the minimally-invasive treatment of mitral regurgitation. In March, Abbott announced MitraClip was granted national reimbursement in Japan, which enables greater access for patients to this life-altering therapy. In Neuromodulation, strong double-digit growth was led by a portfolio of recently launched products for the treatment of chronic pain and movement disorders.

In Diabetes Care, worldwide sales increased 44.2 percent on a reported basis in the first quarter, including a favorable 11.3 percent effect of foreign exchange, and increased 32.9 percent on an organic basis. Strong double-digit growth was led by FreeStyle Libre, Abbott's revolutionary sensor-based continuous glucose monitoring (CGM) system, which removes the need for routine fingersticks2 for people with diabetes. During the quarter, Abbott announced that the FreeStyle LibreLink3,4 app is available in Europe for use with compatible smartphones, which allows people to access glucose data directly from their phones and eliminates the need to carry a separate scanning device.

ABBOTT'S FULL-YEAR EARNINGS-PER-SHARE GUIDANCE

Abbott projects 2018 diluted earnings per share from continuing operations under Generally Accepted Accounting Principles (GAAP) of $1.23 to $1.33.

Abbott forecasts net specified items for the full year 2018 of approximately $1.57 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 $2.80 to $2.90 for the full year 2018.

Abbott is issuing second-quarter 2018 guidance for diluted earnings per share from continuing operations under GAAP of $0.33 to $0.35. Abbott forecasts specified items for the second quarter 2018 of $0.37 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 $0.70 to $0.72 for the second quarter.

ABBOTT DECLARES 377TH CONSECUTIVE QUARTERLY DIVIDEND

On Feb. 16, 2018, the board of directors of Abbott declared the company's quarterly dividend of $0.28 per share. Abbott's cash dividend is payable May 15, 2018, to shareholders of record at the close of business on April 13, 2018.

Abbott has increased its dividend payout for 46 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 company devoted to improving life through the development of products and technologies that span the breadth of healthcare. With a portfolio of leading, science-based offerings in diagnostics, medical devices, nutritionals and branded generic pharmaceuticals, Abbott serves people in more than 150 countries and employs approximately 99,000 people.

Visit Abbott at www.abbott.com and connect with us on Twitter at @AbbottNews.

Abbott will webcast its live first-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 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, 2017, 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)          Full-year 2018 guidance for
                 diluted EPS from continuing
                 operations on a GAAP basis
                 represents 540.0 percent
                 growth at the midpoint of the
                 range.

    (2)          Fingersticks are required for
                 treatment decisions when you
                 see Check Blood Glucose
                 symbol, when symptoms do not
                 match system readings, when
                 you suspect readings may be
                 inaccurate, or when you
                 experience symptoms that may
                 be due to high or low blood
                 glucose.

    (3)          Use of the FreeStyle LibreLink
                 app requires registration with
                 LibreView, a service provided
                 by Abbott and Newyu, Inc.

    4            The FreeStyle LibreLink app is
                 compatible with NFC enabled
                 phones running Android OS 5.0
                 or higher and with iPhone 7
                 and later running iOS 11 and
                 later.

 

                                       Abbott Laboratories and Subsidiaries

                                   Condensed Consolidated Statement of Earnings

                                   First Quarter Ended March 31, 2018 and 2017

                                       (in millions, except per share data)

                                                   (unaudited)


                                        1Q18                               1Q17            %
                                                                                         Change
                                                                                         ------

    Net Sales                                  $7,390                             $6,335            16.7


    Cost of products sold,
     excluding amortization
     expense                                    3,067                              3,062             0.1

    Amortization of intangible
     assets                                       584                                522            12.0

    Research and development                      589                                553             6.4

    Selling, general, and
     administrative                             2,542                              2,440             4.2

    Total Operating Cost and
     Expenses                                   6,782                              6,577             3.1
                                                -----                              -----


    Operating earnings (loss)                     608                              (242)            n/m      1)


    Interest expense, net                         199                                204           (2.1)

    Net foreign exchange (gain)
     loss                                         (3)                              (16)         (79.9)

    Debt extinguishment costs                      14                                 --            n/m

    Other (income) expense, net                  (33)                           (1,166)         (97.1)   1) 2)
                                                  ---                             ------

    Earnings from Continuing
     Operations before taxes                      431                                736          (41.5)


    Tax expense on Earnings from
     Continuing Operations                         22                                350          (93.8)      3)

    Earnings from Continuing
     Operations                                   409                                386             6.1


    Earnings from Discontinued
     Operations, net of taxes                       9                                 33          (74.7)      4)
                                                  ---                                ---


    Net Earnings                                 $418                               $419           (0.4)
                                                 ====                               ====


    Earnings from Continuing
     Operations, excluding

    Specified Items, as described
     below                                     $1,050                               $843            24.5       5)
                                               ======                               ====


    Diluted Earnings per Common
     Share from:

    Continuing Operations                       $0.23                              $0.22             4.5

    Discontinued Operations                        --                              0.02             n/m      4)
                                                  ---                              ----

    Total                                       $0.23                              $0.24           (4.2)
                                                =====                              =====


    Diluted Earnings per Common
     Share from Continuing

    Operations, excluding
     Specified Items, as described
     below                                      $0.59                              $0.48            22.9       5)
                                                =====                              =====


    Average Number of Common
     Shares Outstanding

    Plus Dilutive Common Stock
     Options                                    1,765                              1,735


    NOTES:


    See tables below for an
     explanation of certain non-
     GAAP financial information.

    n/m = Percent change is not
     meaningful.

    See footnotes below.


    1)                               Effective January 1, 2018, Abbott
                                     adopted Accounting Standards Update
                                     2017-07, Compensation - Retirement
                                     Benefits (Topic 715): Improving the
                                     Presentation of Net Periodic Pension
                                     Cost and Net Periodic Postretirement
                                     Benefit Cost, which resulted in a
                                     retrospective reclassification of
                                     $40 million of net pension-related
                                     income from Operating earnings
                                     (loss) to Other (income) expense,
                                     net for the first quarter of 2017.


    2)                               2017 Other (income) expense, net
                                     includes a pretax gain of $1.151
                                     billion from the sale of the AMO
                                     business.


    3)                               2018 Tax expense on Earnings from
                                     Continuing Operations includes the
                                     impact of approximately $65 million
                                     in excess tax benefits associated
                                     with share-based compensation.


                                    2017 Tax expense on Earnings from
                                     Continuing Operations includes the
                                     tax associated with a $1.151
                                     billion pretax gain on the sale of
                                     the AMO business.


    4)                               2018 and 2017 Earnings and Diluted
                                     Earnings per Common Share from
                                     Discontinued Operations, net of
                                     taxes reflect the impact of net tax
                                     benefits of $9 million and $33
                                     million, respectively, as a result
                                     of the resolution of various tax
                                     positions from prior years.


    5)                               2018 Net Earnings and Diluted
                                     Earnings per Common Share from
                                     Continuing Operations, excluding
                                     Specified Items, excludes net
                                     after-tax charges of $641 million,
                                     or $0.36 per share, for intangible
                                     amortization expense and other
                                     expenses primarily associated with
                                     acquisitions and restructuring
                                     actions.


                                    2017 Net Earnings and Diluted
                                     Earnings per Common Share from
                                     Continuing Operations, excluding
                                     Specified Items, excludes net
                                     after-tax charges of $457 million,
                                     or $0.26 per share, for intangible
                                     amortization expense and other
                                     expenses primarily associated with
                                     acquisitions and restructuring
                                     actions, partially offset by a gain
                                     on the sale of the AMO business.

 

                                                            Abbott Laboratories and Subsidiaries

                                        Non-GAAP Reconciliation of Financial Information From Continuing Operations

                                                        First Quarter Ended March 31, 2018 and 2017

                                                            (in millions, except per share data)

                                                                        (unaudited)


                                                  1Q18
                                                  ----

                                             As                                      Specified                         As            % to
                                          Reported                                     Items                        Adjusted        Sales
                                           (GAAP)
                                            -----


    Intangible Amortization                            $584                                       $(584)                        --

    Gross Margin                                      3,739                                          647                     $4,386        59.3%

    R&D                                                 589                                         (43)                       546         7.4%

    SG&A                                              2,542                                         (90)                     2,452        33.2%

    Net foreign exchange (gain) loss                    (3)                                         (1)                       (4)

    Debt extinguishment costs                            14                                         (14)                        --

    Other (income) expense, net                        (33)                                         (2)                      (35)

    Earnings from Continuing Operations
     before taxes                                       431                                          797                      1,228

    Tax expense on Earnings from
     Continuing Operations                               22                                          156                        178

    Earnings from Continuing Operations                 409                                          641                      1,050

    Diluted Earnings per Share from
     Continuing Operations                            $0.23                                        $0.36                      $0.59

Specified items reflect intangible amortization expense of $584 million and other expenses of $213 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.

                           1Q17
                           ----

                     As            Specified           As            % to
                  Reported           Items          Adjusted        Sales
                   (GAAP)
                    -----


     Intangible
     Amortization             $522           $(522)             --

    Gross
     Margin                  2,751              984          $3,735        59.0%

    R&D                        553             (40)            513         8.1%

    SG&A                     2,440            (367)          2,073        32.7%

    Interest
     expense,
     net                       204             (17)            187

    Other
     (income)
     expense,
     net                   (1,166)           1,134            (32)

    Earnings
     from
     Continuing
     Operations
     before
     taxes                     736              274           1,010

    Tax
     expense
     on
     Earnings
     from
     Continuing
     Operations                350            (183)            167

    Earnings
     from
     Continuing
     Operations                386              457             843

    Diluted
     Earnings
     per
     Share
     from
     Continuing
     Operations              $0.22            $0.26           $0.48

    Note: The As Reported and As
     Adjusted amounts reflect the
     impact of adopting the new
     accounting rules related to the
     recognition of retirement
     benefits - See Footnote 1 on
     table titled "Condensed
     Consolidated Statement of
     Earnings" for additional
     information.

Specified items reflect intangible amortization expense of $522 million and other expenses of $903 million, primarily associated with acquisitions, including approximately $390 million of inventory step-up amortization related to St. Jude Medical, charges related to restructuring actions and other expenses, partially offset by a gain of $1.151 billion from the sale of the AMO business. 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 2018 and 2017 is shown below:

                                       1Q18
                                       ----

    ($ in millions)           Pre-Tax         Taxes on       Tax
                              Income          Earnings       Rate
                              ------          --------       ----

    As reported (GAAP)                   $431            $22       5.0% 1)

    Specified items                       797            156
                                          ---            ---

    Excluding specified items          $1,228           $178      14.5%


                                     1Q17
                                     ----

    ($ in millions)           Pre-Tax         Taxes on       Tax
                              Income          Earnings       Rate
                              ------          --------       ----

    As reported (GAAP)                   $736           $350      47.6% 2)

    Specified items                       274          (183)
                                          ---           ----

    Excluding specified items          $1,010           $167      16.5%

    1)             Reported tax rate on a GAAP basis
                   for 2018 includes the impact of
                   approximately $65 million in excess
                   tax benefits associated with share-
                   based compensation.


    2)             Reported tax rate on a GAAP basis
                   for 2017 includes the impact of
                   taxes associated with a $1.151
                   billion pretax gain on the sale of
                   the AMO business.

 

                                                                                        Abbott Laboratories and Subsidiaries

                                                                               Non-GAAP Reconciliation of Adjusted Historical Revenue

                                                                                    First Quarter Ended March 31, 2018 and 2017

                                                                                            ($ in millions) (unaudited)


                                 1Q18                           1Q17                                            % Change vs. 1Q17
                                  ----                        ----                                          -----------------

                           Abbott                               Adjusted                       Abbott                                   Divested                 Adjusted                       Non-GAAP
                          Reported                               Revenue                      Reported                                Businessesa)                Revenue
                          --------                               -------                      --------                                -----------                 -------

                                               Rapid                                                                   Reported                         Reported               Organicb)
                                            Diagnostics
                                            -----------


    Total Company                     7,390             (559)            6,831                              6,335                                  (187)                  6,148            16.7             11.1      6.9

    U.S.                              2,675             (323)            2,352                              2,324                                   (84)                  2,240            15.1              5.0      5.0

    Int'l                             4,715             (236)            4,479                              4,011                                  (103)                  3,908            17.6             14.6      8.0

    Total Diagnostics                 1,837             (559)            1,278                              1,158                                     --                  1,158            58.7             10.4      5.5

    U.S.                                700             (323)              377                                371                                     --                    371            89.2              1.8      1.8

    Int'l                             1,137             (236)              901                                787                                     --                    787            44.3             14.4      7.3

    Rapid Diagnostics                   559             (559)               --                                --                                    --                     --            n/m             n/m     n/m

    U.S.                                323             (323)               --                                --                                    --                     --            n/m             n/m     n/m

    Int'l                               236             (236)               --                                --                                    --                     --            n/m             n/m     n/m

    Total Medical Devices             2,744                --            2,744                              2,395                                   (12)                  2,383            14.6             15.1      9.4

    U.S.                              1,209                --            1,209                              1,136                                    (6)                  1,130             6.4              6.9      6.9

    Int'l                             1,535                --            1,535                              1,259                                    (6)                  1,253            22.0             22.6     11.7

    Cardiovascular and
     Neuromodulation                  2,323                --            2,323                              2,103                                   (12)                  2,091            10.5             11.1      6.2

    U.S.                              1,123                --            1,123                              1,061                                    (6)                  1,055             5.8              6.4      6.4

    Int'l                             1,200                --            1,200                              1,042                                    (6)                  1,036            15.2             15.9      6.0

    Vascular                            739                --              739                                703                                   (12)                    691             5.2              6.9      1.6

    U.S.                                286                --              286                                304                                    (6)                    298           (6.0)           (4.1)   (4.1)

    Int'l                               453                --              453                                399                                    (6)                    393            13.7             15.3      5.9


    a) Reflects sales related to
     the AMO and St. Jude Medical
     vascular closure businesses
     prior to divesting in the
     first quarter 2017.

    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

                                                                                First Quarter Ended March 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                                                           $45                        $18                        $584         $      --                  $647

    R&D                                                                   (16)                       (2)                         --             (25)                  (43)

    SG&A                                                                  (86)                       (4)                         --               --                  (90)

    Net foreign exchange (gain)
     loss                                                                   --                       (1)                         --               --                   (1)

    Debt extinguishment costs                                               --                        --                         --             (14)                  (14)

    Other (income) expense, net                                            (2)                        --                         --               --                   (2)
                                                                           ---                        ---                        ---              ---                   ---

    Earnings from Continuing
     Operations before taxes                                              $149                        $25                        $584               $39                    797
                                                                          ----                        ---                        ----               ---

    Tax expense on Earnings from Continuing Operations (d)                                                                                                           156
                                                                                                                                                                     ---

    Earnings from Continuing
     Operations                                                                                                                                                       $641
                                                                                                                                                                      ====

    Diluted Earnings per Share from Continuing Operations                                                                                                          $0.36
                                                                                                                                                                   =====

    The table above provides additional details
     regarding the specified items described on
     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 expense
                                                    relates to the
                                                    acquisition of
                                                    an R&D asset
                                                    and the cost
                                                    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

                                                                              First Quarter Ended March 31, 2017

                                                                             (in millions, except per share data)

                                                                                         (unaudited)


                                                       Acquisition or                      Restructuring              Intangible           Total
                                                        Divestiture-                          and Cost               Amortization       Specifieds
                                                         related (a)                         Reduction
                                                                                          Initiatives (b)
                                                                                           --------------

    Gross Margin                                                        $406                                     $56               $522                   $984

    R&D                                                                 (14)                                   (26)                --                  (40)

    SG&A                                                               (352)                                   (15)                --                 (367)

    Interest expense, net                                               (17)                                     --                --                  (17)

    Other (income)
     expense, net                                                      1,168                                    (34)                --                 1,134
                                                                       -----                                     ---                ---                 -----

    Earnings from
     Continuing Operations
     before taxes                                                     $(379)                                   $131               $522                    274
                                                                       -----                                    ----               ----

    Tax expense on Earnings from Continuing Operations (c)                                                                                         (183)
                                                                                                                                                    ----

    Earnings from
     Continuing Operations                                                                                                                             $457
                                                                                                                                                       ====

    Diluted Earnings per Share from Continuing Operations                                                                                           $0.26
                                                                                                                                                    =====

    The table above provides additional details
     regarding the specified items described on
     tables titled "Non-GAAP Reconciliation of
     Financial Information From Continuing
     Operations."


    a)             Acquisition-related expenses
                   include bankers' fees and 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. The specified items
                   in interest expense include
                   amortization expense associated
                   with acquisition-related bridge
                   facility fees. Divestiture-related
                   expenses include incremental costs
                   to separate the divested businesses
                   as well as bankers' fees and costs
                   for legal, accounting, tax, and
                   other services related to the
                   divestitures.


    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. Any gains
                   related to the divestiture of a
                   facility as part of a restructuring
                   program are also included in this
                   category.


    c)             Reflects the net tax benefit
                   associated with the specified items
                   and excess tax benefits associated
                   with share-based compensation.

 

 

 

CONTACT: Abbott Financial: Scott Leinenweber, 224-668-0791, Michael Comilla, 224-668-1872; Abbott Media: Darcy Ross, 224-667-3655

 

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SOURCE Abbott

     
 
Company Codes: NYSE:ABT
 

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