01—Abstract
Summary
Summary of the 10-K filed February 22, 2019. Cited figures are marked; the original filing is the authoritative source.
Abbott Laboratories' 2018 10-K filing highlights a year of significant strategic growth and integration following major acquisitions in 2017, namely St. Jude Medical and Alere.
The company's diversified healthcare portfolio, spanning Established Pharmaceuticals, Diagnostics, Nutritional Products, and Cardiovascular & Neuromodulation Products, demonstrated resilience and growth. Acquisitions have expanded Abbott's market leadership, particularly in diagnostics and medical devices, while strategic divestitures have refined its focus.
The company successfully integrated acquired businesses, managing associated costs while driving operational improvements and investing in research and development to support future innovation. Abbott's financial health remains robust, supported by strong cash flow generation and a commitment to returning capital to shareholders through dividends and share repurchases, alongside a proactive approach to managing its debt.
02—Key points
Key Highlights
- Abbott completed the strategic acquisitions of St. Jude Medical for approximately $23.6 billion and Alere for approximately $4.5 billion in 2017, significantly expanding its presence in cardiovascular devices and diagnostics, respectively.
- The company reported net sales of $30.6 billion for the year ended December 31, 2018, reflecting growth driven by acquisitions and organic volume increases across its key business segments.
- Abbott's Diagnostics segment saw substantial growth, with worldwide sales increasing 33.6% (excluding foreign exchange) in 2018, largely due to the integration of Alere and the continued rollout of the Alinity diagnostic systems.
- The Cardiovascular and Neuromodulation segment experienced sales growth of 4.9% (excluding foreign exchange) in 2018, driven by strong performance in Structural Heart, Electrophysiology, and Neuromodulation products.
- The company repurchased approximately $8.3 billion of debt in 2018, reducing its total debt to $19.6 billion, demonstrating a commitment to strengthening its balance sheet post-acquisitions.
- Abbott declared dividends of $1.16 per share in 2018, an increase of approximately 8% over the previous year, and increased its quarterly dividend by approximately 14% in December 2018.
- The company continued to invest in research and development, with R&D expenses totaling $2.3 billion in 2018, focusing on innovation across all its business segments, including the development of new diagnostic systems and advancements in medical devices.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Abbott Laboratories kept $0.08.
- Revenue$30.58B100.0%
- Cost of revenue−$12.71B41.6%
- Gross profit$17.87B58.4%
- Operating costs−$14.22B46.5%
- Operating income$3.65B11.9%
- Interest, other & tax−$1.28B4.2%
- Net income$2.37B7.7%
Where FY2018 revenue went
$30.58B- Cost of revenue: $12.71B, 42% of revenue
- SG&A: $9.74B, 32% of revenue
- Net income: $2.37B, 7.7% of revenue
- R&D: $2.30B, 7.5% of revenue
- Other operating costs: $2.18B, 7.1% of revenue
- Interest, other & tax: $1.28B, 4.2% of revenue
Kept 7.7% as net incomeNet income $2.37B · 7.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 22, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $30.58B$27.39B | +11.6% |
| Cost of Revenue | $12.71B$12.34B | +3.0% |
| Gross Profit | $17.87B$15.05B | +18.7% |
| R&D Expenses | $2.30B$2.26B | +1.8% |
| SG&A Expenses | $9.74B$9.18B | +6.1% |
| Operating Expenses | $26.93B$25.83B | +4.3% |
| Operating Income | $3.65B$1.56B | +133.4% |
| Interest Expense | $826.00M$904.00M | −8.6% |
| Net Income | $2.37B$477.00M | +396.4% |
| EPS (Basic) | $1.34$0.27 | +396.3% |
| EPS (Diluted) | $1.33$0.27 | +392.6% |
| Shares Outstanding (Basic) | 1.76B1.74B | +1.0% |
| Shares Outstanding (Diluted) | 1.77B1.75B | +1.2% |
05—Questions
Frequently Asked Questions
What were the key strategic moves made by Abbott Laboratories in 2017 that impacted its business in 2018?
In 2017, Abbott completed two major acquisitions: St. Jude Medical for approximately $23.6 billion, significantly bolstering its Cardiovascular and Neuromodulation Products segment, and Alere for approximately $4.5 billion, establishing a leadership position in the diagnostics market, particularly in point-of-care testing.
How did the acquisitions affect Abbott's financial performance in 2018?
The acquisitions of St. Jude Medical and Alere contributed significantly to Abbott's top-line growth in 2018. Net sales increased to $30.6 billion. The Diagnostics segment, in particular, saw substantial growth due to the Alere integration and the rollout of Alinity systems. The Cardiovascular and Neuromodulation segment also benefited from the St. Jude Medical acquisition, with growth driven by key product areas like Structural Heart and Electrophysiology.
What is Abbott's approach to managing its debt after the 2017 acquisitions?
Abbott has demonstrated a proactive approach to managing its increased debt load post-acquisitions. In 2018, the company repaid approximately $8.3 billion of debt, reducing its total debt to $19.6 billion. This focus on deleveraging strengthens the balance sheet and enhances financial flexibility.
How is Abbott investing in future growth?
Abbott is investing in future growth through significant research and development expenditures, totaling $2.3 billion in 2018. Key areas of focus include the continued commercialization and geographic expansion of its Alinity diagnostic systems, advancements in cardiovascular and neuromodulation devices, new product introductions in its nutritionals business, and driving growth in emerging markets for its established pharmaceutical products.
06—Continue