01—Abstract
Summary
Summary of the 10-K filed February 17, 2023. Cited figures are marked; the original filing is the authoritative source.
Abbott Laboratories reported strong performance in its 2022 fiscal year, driven by its diversified healthcare portfolio across Medical Devices, Diagnostics, Established Pharmaceuticals, and Nutritional Products.
The company demonstrated resilience despite various market challenges, including supply chain disruptions and the ongoing impact of the COVID-19 pandemic, though the latter led to a notable decline in COVID-19 testing revenues as anticipated. Key growth drivers included the Medical Devices segment, bolstered by its Diabetes Care products like FreeStyle Libre, and the Established Pharmaceuticals segment, which saw continued expansion in emerging markets. The company navigated the significant impact of a voluntary infant formula recall and subsequent manufacturing issues within its Nutritional Products segment, implementing strategies to mitigate supply shortages.
Despite these challenges, Abbott maintained a strong financial position, evidenced by consistent dividend payouts and a significant share repurchase program. The company also announced a strategic acquisition in the medical device space, signaling continued investment in growth and innovation. Management expressed confidence in future growth driven by product development and market expansion across all segments.
02—Key points
Key Highlights
- Abbott Laboratories' net sales were $43.7 billion for the year ended December 31, 2022.
- The company's business is diversified across four key segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.
- Medical Devices segment sales grew 8.1% (excluding foreign exchange) in 2022, driven by Diabetes Care, Structural Heart, Electrophysiology, and Heart Failure.
- Diagnostic Products segment sales increased 10.4% (excluding foreign exchange) in 2022, primarily due to demand for COVID-19 diagnostic tests, though this is expected to decline in 2023.
- Nutritional Products segment sales decreased 6.2% (excluding foreign exchange) in 2022, largely impacted by a voluntary infant formula recall and manufacturing stoppage in the US.
- Established Pharmaceutical Products segment sales increased 10.6% (excluding foreign exchange) in 2022, driven by growth in emerging markets like India, China, and Brazil.
- Abbott announced a definitive agreement to acquire Cardiovascular Systems, Inc. (CSI) for approximately $890 million to expand its vascular device offerings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Abbott Laboratories kept $0.16.
- Revenue$43.65B100.0%
- Cost of revenue−$19.14B43.9%
- Gross profit$24.51B56.1%
- Operating costs−$16.15B37.0%
- Operating income$8.36B19.2%
- Interest, other & tax−$1.43B3.3%
- Net income$6.93B15.9%
Where FY2022 revenue went
$43.65B- Cost of revenue: $19.14B, 44% of revenue
- SG&A: $11.25B, 26% of revenue
- Net income: $6.93B, 16% of revenue
- R&D: $2.89B, 6.6% of revenue
- Other operating costs: $2.01B, 4.6% of revenue
- Interest, other & tax: $1.43B, 3.3% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 17, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $43.65B$43.08B | +1.3% |
| Cost of Revenue | $19.14B$18.54B | +3.3% |
| Gross Profit | $24.51B$24.54B | −0.1% |
| R&D Expenses | $2.89B$2.74B | +5.3% |
| SG&A Expenses | $11.25B$11.32B | −0.7% |
| Operating Expenses | $35.29B$34.65B | +1.8% |
| Operating Income | $8.36B$8.43B | −0.7% |
| Interest Expense | $558.00M$533.00M | +4.7% |
| Net Income | $6.93B$7.07B | −2.0% |
| EPS (Basic) | $3.94$3.97 | −0.8% |
| EPS (Diluted) | $3.91$3.94 | −0.8% |
| Shares Outstanding (Basic) | 1.75B1.77B | −1.2% |
| Shares Outstanding (Diluted) | 1.76B1.79B | −1.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Abbott's revenue in 2022?
Abbott's revenue in 2022 was driven by growth in its Medical Devices and Established Pharmaceuticals segments. The Diagnostic Products segment also contributed significantly, primarily due to COVID-19 testing sales, although this is expected to decrease. The Nutritional Products segment experienced a decline due to a product recall.
What impact did the infant formula recall have on Abbott's financial performance?
The voluntary infant formula recall and manufacturing stoppage in February 2022 significantly impacted the Nutritional Products segment, leading to a decrease in sales for that segment. The company incurred charges related to the recall and implemented strategies to mitigate supply shortages.
How is Abbott addressing potential declines in COVID-19 testing revenue?
Abbott expects a significant decrease in demand for COVID-19 tests in 2023 as the pandemic shifts to an endemic state and the public health emergency ends. The company is focusing on growing its other product lines, including its Alinity suite of diagnostics instruments and its portfolio of rapid diagnostic testing systems, to offset this expected decline.
What is Abbott's strategy for future growth?
Abbott plans to drive future growth through continued product development and innovation across all its segments. The company is focusing on expanding its medical device portfolio, including the announced acquisition of Cardiovascular Systems, Inc., advancing its diagnostics offerings, growing its pharmaceutical business in emerging markets, and recovering and growing its nutritional products business.
06—Continue