Summary
Abbott Laboratories reported solid results for the first quarter of 2017, significantly bolstered by the completion of the St. Jude Medical acquisition on January 4, 2017. This strategic move dramatically increased net sales, primarily in the Cardiovascular and Neuromodulation segment. The company also completed the divestiture of its vision care business (AMO) to Johnson & Johnson, resulting in a substantial pre-tax gain. Despite the significant impact of the St. Jude Medical acquisition, which included a substantial increase in goodwill and intangible assets, and associated amortization expenses, Abbott demonstrated resilience. The company also saw positive sales growth in its Established Pharmaceutical Products and Diagnostic Products segments, even after accounting for foreign exchange impacts. Management is focused on integrating the new acquisitions and streamlining operations, while also navigating ongoing legal and regulatory matters, including an FDA warning letter related to a St. Jude facility.
Financial Highlights
51 data points| Revenue | $6.33B |
| Cost of Revenue | $3.06B |
| Gross Profit | $2.75B |
| SG&A Expenses | $2.44B |
| Operating Expenses | $6.58B |
| Operating Income | -$242.00M |
| Interest Expense | $226.00M |
| Net Income | $419.00M |
| EPS (Basic) | $0.24 |
| EPS (Diluted) | $0.24 |
| Shares Outstanding (Basic) | 1.73B |
| Shares Outstanding (Diluted) | 1.74B |
Key Highlights
- 1Net sales increased by 29.7% to $6.3 billion, primarily driven by the acquisition of St. Jude Medical, which closed on January 4, 2017, and a 34.7% increase in total segment sales excluding foreign exchange.
- 2The Cardiovascular and Neuromodulation Products segment saw a substantial 207.0% increase in net sales (208.2% excluding foreign exchange) due to the St. Jude Medical acquisition, adding $1.4 billion in sales and a pre-tax loss of $576 million (including amortization).
- 3Abbott recognized a significant pre-tax gain of $1.151 billion from the sale of its Abbott Medical Optics (AMO) business to Johnson & Johnson, completed in February 2017.
- 4The company's net earnings increased to $419 million ($0.24 per diluted share) from $316 million ($0.21 per diluted share) in the prior year's quarter, benefiting from the sale of AMO and a significant tax benefit related to discontinued operations.
- 5Goodwill increased substantially from $7.7 billion to $21.4 billion, largely due to the $23.6 billion acquisition of St. Jude Medical, which also significantly increased intangible assets.
- 6The pending acquisition of Alere Inc. was amended, reducing the purchase price by approximately $500 million to $5.3 billion, with an expected closing in the third quarter of 2017.
- 7The company received an FDA warning letter concerning its Sylmar, California manufacturing facility, acquired as part of the St. Jude Medical acquisition. Abbott will respond to the FDA's observations.