10-QPeriod: Q3 FY2018

ABBOTT LABORATORIES Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 31, 2018For Securities:ABT

Summary

Abbott Laboratories reported strong top-line growth for the nine months ended September 30, 2018, with net sales increasing by 15.2% to $22.8 billion, driven by a robust performance across all key business segments, particularly Diagnostics and Cardiovascular & Neuromodulation. This growth was significantly bolstered by the acquisition of Alere Inc. in late 2017, which has established Abbott as a leader in point-of-care testing. Profitability showed significant improvement as well, with Net Earnings rising to $1.71 billion for the nine-month period, a substantial increase from $1.31 billion in the prior year. This was aided by the absence of a large one-time gain on business disposition in the prior year and improved gross profit margins, partly due to the integration of acquisitions and effective cost management. The company also continued its commitment to returning value to shareholders through increased dividends.

Financial Highlights

52 data points
Beta

Revenue

$7.66B

51.5% Gross Margin

Net Income

$563.00M

7.4% Net Margin

EPS (Diluted)

$0.32

Total Assets

$71.64B

Cash & Equivalents

$7.37B

Free Cash Flow

$1.83B

Financial Statements
Beta
Revenue$7.66B
Cost of Revenue$3.17B
Gross Profit$3.95B
R&D Expenses$574.00M
SG&A Expenses$2.38B
Operating Expenses$6.66B
Operating Income$995.00M
Interest Expense$203.00M
Net Income$563.00M
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)1.76B
Shares Outstanding (Diluted)1.77B

Key Highlights

  • 1Net sales increased by 15.2% to $22.8 billion for the nine months ended September 30, 2018, driven by broad-based segment growth and the Alere acquisition.
  • 2The Diagnostic Products segment saw a significant 49.2% increase in net sales (excluding foreign exchange), largely due to the Alere acquisition and strong performance in Core Laboratory diagnostics.
  • 3Net Earnings grew to $1.71 billion for the nine months ended September 30, 2018, up from $1.31 billion in the prior year.
  • 4Gross profit margin improved to 50.9% for the nine months of 2018, compared to 46.8% in the same period of 2017, benefiting from acquisition integration and margin improvements in key businesses.
  • 5The company made significant strides in debt management, repaying substantial amounts of long-term debt and issuing new euro debt, while maintaining an investment-grade credit rating.
  • 6Quarterly cash dividends per common share increased by approximately 6% to $0.28 in the first three quarters of 2018 compared to the same period in 2017.

Frequently Asked Questions

The acquisition of Alere, completed in the fourth quarter of 2017, significantly boosted Abbott's Diagnostic Products segment, contributing to a 49.2% increase in net sales for this segment (excluding foreign exchange) in the first nine months of 2018. It established Abbott as a leader in point-of-care testing and was a primary driver for the overall revenue growth.

Abbott demonstrated improved profitability, with Net Earnings rising to $1.71 billion for the first nine months of 2018. The gross profit margin also saw an increase to 50.9% from 46.8% in the prior year period. This improvement is attributed to the integration of recent acquisitions, benefits from ongoing restructuring and streamlining efforts, and margin enhancements in key product areas.

Abbott has actively managed its debt, repaying approximately $8.3 billion of long-term debt and issuing €3.420 billion of euro debt in the first nine months of 2018. The company aims to maintain its investment-grade credit rating and has readily available financial resources, including committed lines of credit.

Growth was broad-based. The Diagnostic Products segment benefited significantly from the Alere acquisition and strong core lab performance. Nutritional Products saw growth driven by both pediatric and adult nutritionals, especially internationally. Cardiovascular and Neuromodulation experienced solid growth in areas like Electrophysiology and Structural Heart, supported by new product launches and positive clinical trial results. Established Pharmaceutical Products showed growth primarily in Key Emerging Markets.