10-QPeriod: Q1 FY2020

ABBOTT LABORATORIES Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 29, 2020For Securities:ABT

Summary

Abbott Laboratories (ABT) reported solid performance in its first quarter of 2020, with net sales reaching $7.726 billion, a 2.5% increase year-over-year. This growth was primarily driven by strong performance in its Established Pharmaceutical Products and Nutritional Products segments. Despite the onset of the COVID-19 pandemic which began impacting global operations in February and March, Abbott demonstrated resilience. The company quickly pivoted to address the pandemic by launching multiple COVID-19 diagnostic tests, showcasing its agility and commitment to public health. While certain medical device procedures and routine diagnostic testing volumes saw a temporary decline due to the pandemic's impact on healthcare services, Abbott anticipates increased demand as healthcare normalizes.

Financial Highlights

51 data points
Beta

Revenue

$7.73B

57.5% Gross Margin

Net Income

$564.00M

7.3% Net Margin

EPS (Diluted)

$0.31

Total Assets

$66.78B

Cash & Equivalents

$3.38B

Free Cash Flow

$355.00M

Financial Statements
Beta
Revenue$7.73B
Cost of Revenue$3.28B
Gross Profit$4.45B
R&D Expenses$578.00M
SG&A Expenses$2.55B
Operating Expenses$6.97B
Operating Income$758.00M
Interest Expense$139.00M
Net Income$564.00M
EPS (Basic)$0.32
EPS (Diluted)$0.31
Shares Outstanding (Basic)1.77B
Shares Outstanding (Diluted)1.78B

Key Highlights

  • 1Net sales increased by 2.5% to $7.726 billion, driven by growth in Established Pharmaceuticals and Nutritional Products segments.
  • 2Despite early COVID-19 impacts, the company launched three new diagnostic tests for COVID-19, demonstrating rapid response capabilities.
  • 3Earnings per diluted share were $0.31, a decrease from $0.38 in the prior year, impacted by various factors including foreign currency translation adjustments and changes in tax expense.
  • 4The company maintained a strong liquidity position with $3.377 billion in cash and cash equivalents and access to $5 billion in credit facilities.
  • 5Significant negative foreign currency translation adjustments of $(1.144) billion impacted Other Comprehensive Income.
  • 6Research and development expenses decreased by 14.1% due to a large R&D asset expensed in the prior year.
  • 7The company announced a 12.5% increase in its quarterly dividend to $0.36 per share.

Frequently Asked Questions

The COVID-19 pandemic began to impact Abbott's operations in February and March 2020. While some businesses faced challenges, particularly in elective medical procedures and routine diagnostic testing volumes which declined in certain regions, other areas saw increased demand. Abbott also responded rapidly by developing and launching three new COVID-19 diagnostic tests, demonstrating its adaptability.

Net sales increased by 2.5% to $7.726 billion in the first quarter of 2020 compared to $7.535 billion in the first quarter of 2019. However, diluted earnings per share decreased to $0.31 in the current quarter from $0.38 in the prior year. This decrease was influenced by factors such as foreign currency translation adjustments and a change in tax expense.

Abbott maintained a strong financial position with $3.377 billion in cash and cash equivalents and short-term investments at the end of the quarter. The company also has access to $5 billion in credit facilities. Abbott continues to implement business continuity plans and is generally exempt from governmental orders requiring businesses to cease operations due to the critical nature of its products.

Abbott's Established Pharmaceutical Products and Nutritional Products segments showed strong growth. While Medical Devices and Diagnostics segments experienced some headwinds due to reduced elective procedures and routine testing, Abbott launched critical COVID-19 diagnostic tests which are expected to drive future demand. The company anticipates increased demand for its products as healthcare services return to more normal levels.