10-KPeriod: FY2016

ABBOTT LABORATORIES Annual Report, Year Ended Dec 31, 2016

Filed February 17, 2017For Securities:ABT

Summary

Abbott Laboratories' 2016 10-K filing highlights a year of strategic portfolio management and preparation for significant growth. The company successfully navigated a dynamic healthcare landscape, reporting net sales of $20.85 billion. Key strategic moves included the announcement of the sale of its vision care business (Abbott Medical Optics) to Johnson & Johnson and the ongoing, though contentious, acquisition of Alere Inc. Most notably, Abbott completed the transformative acquisition of St. Jude Medical in January 2017, significantly expanding its presence in the cardiovascular market and medical device sector. The company continued to invest in research and development, spending approximately $1.4 billion in 2016 across its diverse segments: Established Pharmaceutical Products, Nutritional Products, Diagnostic Products, and Vascular Products.

Financial Highlights

54 data points
Beta

Revenue

$20.85B

56.7% Gross Margin

Net Income

$1.40B

6.7% Net Margin

EPS (Diluted)

$0.94

Total Assets

$52.67B

Cash & Equivalents

$18.62B

Free Cash Flow

$2.08B

Financial Statements
Beta
Revenue$20.85B
Cost of Revenue$9.02B
Gross Profit$11.83B
SG&A Expenses$6.74B
Operating Expenses$17.83B
Operating Income$3.03B
Interest Expense$431.00M
Net Income$1.40B
EPS (Basic)$0.94
EPS (Diluted)$0.94
Shares Outstanding (Basic)1.48B
Shares Outstanding (Diluted)1.48B

Key Highlights

  • 1Net sales for the year ended December 31, 2016, were $20.85 billion.
  • 2The company announced its intention to sell its vision care business (Abbott Medical Optics) to Johnson & Johnson for $4.325 billion.
  • 3Abbott was actively pursuing the acquisition of Alere Inc. but also filed a complaint seeking to terminate the merger agreement due to adverse developments at Alere.
  • 4A significant event was the completion of the acquisition of St. Jude Medical for approximately $23.6 billion in January 2017, substantially strengthening its medical device portfolio, particularly in cardiovascular.
  • 5Research and development expenses totaled $1.4 billion in 2016, underscoring a commitment to innovation across its healthcare segments.
  • 6Sales in emerging markets showed strong growth, increasing by 6.3% in 2016 (excluding foreign exchange), highlighting geographic diversification.
  • 7The company increased its quarterly dividend to $0.265 per share in Q4 2016, demonstrating a commitment to returning value to shareholders.

Frequently Asked Questions

In 2016, Abbott announced its intent to sell its vision care business (Abbott Medical Optics) to Johnson & Johnson. Concurrently, the company was involved in the acquisition of Alere Inc., though this faced legal challenges. The most significant strategic move was the completion of the St. Jude Medical acquisition in January 2017, which substantially expanded Abbott's medical device and cardiovascular offerings.

Abbott operated across four main segments: Established Pharmaceutical Products, Nutritional Products, Diagnostic Products, and Vascular Products. Established Pharmaceuticals saw sales growth driven by emerging markets. Nutritional Products showed resilience despite challenges in China. Diagnostic Products experienced growth, aided by new product launches like the Alinity™ family. The Vascular Products segment saw growth in its MitraClip device, though offset by pricing pressures in coronary devices.

The acquisition of St. Jude Medical was completed in January 2017, so its financial results were not included in the 2016 10-K. However, Abbott did issue $15.1 billion in debt in November 2016 to fund the cash portion of this acquisition. Regarding Alere, Abbott had filed a complaint seeking to terminate the merger agreement, indicating significant uncertainties and potential financial implications, though specific impacts for 2016 were not detailed beyond the legal actions.

Abbott reported that approximately 70% of its net sales were international. The company stated that the strengthening U.S. dollar negatively impacted its sales, costs, and financial position. Specifically, foreign currency exchange losses related to operations in Venezuela resulted in a $480 million charge in 2016.