Summary
Abbott Laboratories reported strong top-line growth in the third quarter and first nine months of 2017, primarily driven by the significant acquisition of St. Jude Medical in January 2017. Net sales increased by 28.2% in the third quarter and 27.6% year-to-date, largely due to the inclusion of St. Jude's sales and robust performance in the Established Pharmaceutical Products and Diagnostic Products segments. While revenue surged, profitability was impacted by increased amortization expenses related to the St. Jude Medical acquisition, leading to a decrease in gross profit margin. The company also completed the acquisition of Alere Inc. shortly after the reporting period, further expanding its diagnostics business. Investors should note the substantial goodwill and intangible assets added from these acquisitions, which will influence future financial results. The company continues to manage its portfolio through divestitures, such as the sale of Abbott Medical Optics (AMO), and strategic acquisitions to drive long-term growth.
Financial Highlights
51 data points| Revenue | $6.83B |
| Cost of Revenue | $2.86B |
| Gross Profit | $3.45B |
| SG&A Expenses | $2.12B |
| Operating Expenses | $6.06B |
| Operating Income | $769.00M |
| Interest Expense | $218.00M |
| Net Income | $603.00M |
| EPS (Basic) | $0.34 |
| EPS (Diluted) | $0.34 |
| Shares Outstanding (Basic) | 1.74B |
| Shares Outstanding (Diluted) | 1.75B |
Key Highlights
- 1Net sales increased by 28.2% to $6.8 billion in Q3 2017 and by 27.6% to $19.8 billion in the first nine months of 2017, largely due to the acquisition of St. Jude Medical.
- 2The Cardiovascular and Neuromodulation Products segment saw a significant increase in net sales (213.1% excluding FX) due to the St. Jude Medical acquisition, which closed in January 2017.
- 3Gross profit margin decreased to 50.8% in Q3 2017 and 47.0% year-to-date, primarily due to higher intangible asset amortization and inventory step-up costs from the St. Jude Medical acquisition.
- 4Research and development expenses increased by 59.3% in Q3 2017 and 50.3% year-to-date, primarily due to the inclusion of St. Jude Medical's R&D operations.
- 5The company completed the acquisition of Alere Inc. for approximately $4.6 billion in October 2017, strengthening its diagnostics portfolio, although Alere's results are not included in this filing's period.
- 6Abbott recorded a $1.163 billion pre-tax gain from the sale of its Abbott Medical Optics (AMO) business to Johnson & Johnson in February 2017.
- 7Cash and cash equivalents decreased from $18.6 billion at the end of 2016 to $11.0 billion at September 30, 2017, largely due to funding the cash portion of the St. Jude Medical acquisition and debt repayments.