01—Abstract
Summary
Summary of the 10-K filed February 21, 2014. Cited figures are marked; the original filing is the authoritative source.
Abbott Laboratories filed its 2013 10-K on February 20, 2014, reporting on its business and financial performance for the fiscal year ended December 31, 2013.
A significant event for the company was the January 1, 2013 separation of its research-based pharmaceuticals business into an independent entity, AbbVie Inc. This separation resulted in the proprietary pharmaceutical products segment being presented as discontinued operations, allowing Abbott to focus on its diversified healthcare products. The company's remaining segments include Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. Financially, Abbott demonstrated resilience, with net sales showing an increase.
The company highlighted growth in its Nutritional and Diagnostic segments, driven by demographic trends and new product introductions. However, the Established Pharmaceutical Products segment faced macroeconomic and market pressures, particularly in emerging markets, while the Vascular Products segment experienced pricing pressure and a decline in U.S. market due to competition and market conditions. The company also addressed its ongoing commitment to research and development, investing significantly to drive future innovation across its business segments.
02—Key points
Key Highlights
- Abbott completed the separation of its research-based pharmaceutical business (AbbVie Inc.) on January 1, 2013, refocusing on diversified healthcare products across four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products.
- Net sales increased to $21.8 billion in 2013 from $21.5 billion in 2012, reflecting growth driven by the Nutritional and Diagnostic segments.
- The Nutritional Products segment saw sales growth of 4.3% (excluding foreign exchange), benefiting from demographic trends and new product introductions, although a product recall in China impacted performance in the latter half of the year.
- The Diagnostic Products segment reported a 5.9% increase in sales (excluding foreign exchange), driven by unit growth across geographical regions and continued execution of integrated solutions for healthcare customers.
- The Established Pharmaceutical Products segment faced challenges with a 2.9% decrease in sales (excluding foreign exchange), largely due to market pressures in emerging markets and austerity measures in developed markets.
- The Vascular Products segment saw a 1.9% decrease in sales (excluding foreign exchange), impacted by pricing pressure on drug-eluting stents and a decline in U.S. market procedures.
- Abbott spent approximately $1.5 billion on research and development in 2013, underscoring its commitment to innovation across its core segments.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Abbott Laboratories kept $0.13.
- Revenue$19.66B100.0%
- Cost of revenue−$9.19B46.8%
- Gross profit$10.46B53.2%
- Operating costs−$8.33B42.4%
- Operating income$2.13B10.9%
- Interest, other & tax$443.0M2.3%
- Net income$2.58B13.1%
Where FY2013 revenue went
$19.66B- Cost of revenue: $9.19B, 47% of revenue
- SG&A: $6.37B, 32% of revenue
- Operating income: $2.13B, 11% of revenue
- Other operating costs: $1.96B, 10.0% of revenue
Kept 11% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 21, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $19.66B$19.05B | +3.2% |
| Cost of Revenue | $9.19B$8.90B | +3.3% |
| Gross Profit | $10.46B$10.15B | +3.1% |
| SG&A Expenses | $6.37B$6.74B | −5.4% |
| Operating Expenses | $17.52B$17.69B | −0.9% |
| Operating Income | $2.13B$1.36B | +56.8% |
| Interest Expense | $145.00M$320.00M | −54.7% |
| Net Income | $2.58B$5.92B | −56.5% |
| EPS (Basic) | $1.64$3.76 | −56.4% |
| EPS (Diluted) | $1.62$3.72 | −56.5% |
| Shares Outstanding (Basic) | 1.56B1.57B | −1.1% |
| Shares Outstanding (Diluted) | 1.57B1.59B | −1.1% |
05—Questions
Frequently Asked Questions
What was the most significant event impacting Abbott Laboratories' financial reporting in 2013?
The most significant event was the completion of the separation of Abbott's research-based proprietary pharmaceuticals business into a new, independent company called AbbVie Inc. This separation occurred on January 1, 2013, and resulted in the proprietary pharmaceutical business being presented as discontinued operations in Abbott's financial statements for 2013.
How did the separation of AbbVie affect Abbott's reported revenue and profitability?
The separation meant that Abbott's reported net sales for 2013 of $21.8 billion represent its diversified healthcare products, excluding the former pharmaceutical business. Earnings from continuing operations were $2.4 billion, while net earnings were $2.6 billion, reflecting the exclusion of AbbVie's results from continuing operations. The discontinued operations segment reported significant earnings as well.
Which segments showed the strongest performance in 2013, and which faced challenges?
The Nutritional Products segment and the Diagnostic Products segment showed strong performance with sales growth. The Established Pharmaceutical Products segment and the Vascular Products segment faced challenges, with declining sales primarily due to market pressures, pricing competition, and macroeconomic factors.
What is Abbott's strategy for future growth?
Abbott's strategy involves focusing on key initiatives within each segment: expanding its product portfolio and emerging markets in Nutritional Products; developing next-generation platforms in Diagnostics; expanding its presence in emerging markets for Established Pharmaceuticals; and continuing to market its Xience and endovascular franchises, along with developing new technologies like Absorb and MitraClip in Vascular Products. The company also plans to continue investing in R&D.
06—Continue