01—Abstract
Summary
Summary of the 10-K filed February 16, 2024. Cited figures are marked; the original filing is the authoritative source.
Abbott Laboratories' 2023 10-K filing highlights a challenging year marked by a significant decline in COVID-19 testing revenues, which were a substantial contributor in prior years.
The company experienced an overall revenue decrease of 8.1%a in 2023 compared to 2022, largely driven by a 63.3% drop in Rapid Diagnostics sales, primarily due to lower COVID-19 test demand. Despite this, Abbott demonstrated resilience across its other segments, with Medical Devices and Established Pharmaceuticals showing robust growth. The Medical Devices segment grew 14.1% (excluding foreign exchange), driven by strong performance in Diabetes Care (FreeStyle Libre), Electrophysiology, Heart Failure, and Structural Heart products.
The Nutritional Products segment also saw recovery, with U.S. Pediatric Nutritionals increasing 26.6%b as the company regained market share post-recall. The Established Pharmaceutical Products segment grew 10.9%, primarily in emerging markets. Investors should note the company's continued investment in R&D and strategic acquisitions to drive future growth, alongside a commitment to returning capital to shareholders through dividends and share repurchases.
02—Key points
Key Highlights
- Total net sales decreased by 8.1% to $40.1 billion in 2023 from $43.7 billion in 2022, largely due to a significant decline in COVID-19 testing-related sales.
- The Medical Devices segment showed strong growth of 14.1% (excluding foreign exchange), driven by key product areas like Diabetes Care, Electrophysiology, and Structural Heart.
- The Nutritional Products segment, particularly U.S. Pediatric Nutritionals, recovered with a 26.6% sales increase (excluding foreign exchange), reflecting market share reclamation after a previous recall.
- Established Pharmaceutical Products sales grew 10.9% (excluding foreign exchange), primarily supported by performance in emerging markets.
- Despite a revenue decline, Abbott continued to manage its costs effectively, with Selling, General, and Administrative (SG&A) expenses decreasing by 2.7% year-over-year.
- The company announced a 7.8% increase in its quarterly dividend to $0.55 per share, demonstrating a commitment to shareholder returns.
- Abbott completed two strategic acquisitions in 2023: Bigfoot Biomedical, Inc. to enhance its diabetes management solutions, and Cardiovascular Systems, Inc. (CSI) to bolster its vascular device offerings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Abbott Laboratories kept $0.14.
- Revenue$40.11B100.0%
- Cost of revenue−$17.98B44.8%
- Gross profit$22.13B55.2%
- Operating costs−$15.66B39.0%
- Operating income$6.48B16.2%
- Interest, other & tax−$755.0M1.9%
- Net income$5.72B14.3%
Where FY2023 revenue went
$40.11B- Cost of revenue: $17.98B, 45% of revenue
- SG&A: $10.95B, 27% of revenue
- Net income: $5.72B, 14% of revenue
- R&D: $2.74B, 6.8% of revenue
- Other operating costs: $1.97B, 4.9% of revenue
- Interest, other & tax: $755.0M, 1.9% of revenue
Kept 14% as net incomeInterest, other & tax $755.0M · 1.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 16, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $40.11B$43.65B | −8.1% |
| Cost of Revenue | $17.98B$19.14B | −6.1% |
| Gross Profit | $22.13B$24.51B | −9.7% |
| R&D Expenses | $2.74B$2.89B | −5.1% |
| SG&A Expenses | $10.95B$11.25B | −2.7% |
| Operating Expenses | $33.63B$35.29B | −4.7% |
| Operating Income | $6.48B$8.36B | −22.5% |
| Interest Expense | $637.00M$558.00M | +14.2% |
| Net Income | $5.72B$6.93B | −17.5% |
| EPS (Basic) | $3.28$3.94 | −16.8% |
| EPS (Diluted) | $3.26$3.91 | −16.6% |
| Shares Outstanding (Basic) | 1.74B1.75B | −0.7% |
| Shares Outstanding (Diluted) | 1.75B1.76B | −0.9% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decline in 2023?
The primary driver of Abbott's revenue decline in 2023 was the significant decrease in sales of COVID-19 testing products. The company's Diagnostics segment, particularly Rapid Diagnostics, experienced a substantial drop in demand as the pandemic shifted to an endemic state and the U.S. public health emergency expired.
How did Abbott's key business segments perform in 2023?
Abbott's Medical Devices segment demonstrated strong growth, increasing by 14.1% (excluding foreign exchange), led by areas like Diabetes Care and Structural Heart. The Established Pharmaceutical Products segment also grew by 10.9% (excluding foreign exchange), with strong performance in emerging markets. The Nutritional Products segment saw a recovery, with U.S. Pediatric Nutritionals up 26.6% (excluding foreign exchange) due to market share regain.
What is Abbott's strategy for future growth?
Abbott plans to focus on continued investment in product development and innovation across its key segments. Specific areas of focus include driving sales growth from its Alinity diagnostics instruments and rapid diagnostic testing systems, expanding market positions for new medical device products, enhancing its global nutritional portfolio with science-based products, and growing its established pharmaceuticals business in emerging markets. The company also pursues strategic acquisitions to complement its existing offerings.
How is Abbott managing its financial health and shareholder returns?
Abbott maintains a strong financial position with significant cash and cash equivalents. The company continued its commitment to shareholder returns by increasing its quarterly dividend by 7.8% to $0.55 per share. It also has an ongoing share repurchase program, with $1.41 billion remaining available as of December 31, 2023.
06—Continue