10-QPeriod: Q2 FY2023

ABBOTT LABORATORIES Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 3, 2023For Securities:ABT

Summary

Abbott Laboratories reported a net sales decrease of 11.4% to $9.98 billion for the second quarter of 2023, largely driven by a significant decline in COVID-19 testing sales. Excluding COVID-19 testing and the impact of foreign exchange, total net sales grew by 11.9%. The Medical Devices segment showed robust growth, increasing 13.5% (15.4% excluding foreign exchange), bolstered by strong performance in Diabetes Care and contributions from recent acquisitions. The Diagnostic segment experienced a substantial decline of 46.0% (44.7% excluding foreign exchange), primarily due to lower demand for COVID-19 tests. Net earnings for the quarter decreased to $1.375 billion ($0.78 per diluted share) from $2.018 billion ($1.14 per diluted share) in the prior year. This decline reflects the reduced sales from COVID-19 diagnostics and increased operating costs, partly offset by the acquisition of Cardiovascular Systems, Inc. (CSI) and ongoing margin improvement initiatives. Despite the top-line contraction driven by the normalization of COVID-19 testing, Abbott's core businesses continue to demonstrate resilience and growth, particularly in its Medical Devices segment.

Financial Highlights

51 data points
Beta

Revenue

$9.98B

55.1% Gross Margin

Net Income

$1.38B

13.8% Net Margin

EPS (Diluted)

$0.78

Total Assets

$73.35B

Cash & Equivalents

$7.83B

Free Cash Flow

$696.00M

Financial Statements
Beta
Revenue$9.98B
Cost of Revenue$4.48B
Gross Profit$5.50B
R&D Expenses$715.00M
SG&A Expenses$2.74B
Operating Expenses$8.44B
Operating Income$1.54B
Interest Expense$159.00M
Net Income$1.38B
EPS (Basic)$0.79
EPS (Diluted)$0.78
Shares Outstanding (Basic)1.74B
Shares Outstanding (Diluted)1.75B

Key Highlights

  • 1Total net sales for Q2 2023 were $9.98 billion, a decrease of 11.4% (8.9% excluding foreign exchange), primarily due to a significant drop in COVID-19 testing sales.
  • 2Excluding COVID-19 testing sales and foreign exchange impacts, Abbott's total net sales increased by 11.9% year-over-year.
  • 3The Medical Devices segment demonstrated strong performance, with net sales growing 13.5% (15.4% excluding foreign exchange), driven by double-digit growth in Diabetes Care and other key areas.
  • 4The Diagnostic Products segment saw a significant decline of 46.0% (44.7% excluding foreign exchange) due to decreased demand for COVID-19 tests.
  • 5Net earnings for Q2 2023 were $1.375 billion ($0.78 diluted EPS), down from $2.018 billion ($1.14 diluted EPS) in Q2 2022.
  • 6Abbott acquired Cardiovascular Systems, Inc. (CSI) for $851 million in April 2023, expanding its vascular device offerings.
  • 7The company repurchased approximately 7 million shares for $725 million in the first six months of 2023 and maintained a strong balance sheet with $7.8 billion in cash and cash equivalents as of June 30, 2023.

Frequently Asked Questions

The primary driver behind the decrease in net sales for Q2 2023 is the significant reduction in sales from COVID-19 diagnostic testing. As the pandemic's impact lessens, demand for these tests has declined substantially compared to the prior year.

Abbott's Medical Devices segment is performing strongly, with a 13.5% increase in net sales (15.4% excluding foreign exchange) year-over-year in Q2 2023. This growth is driven by double-digit increases in key areas such as Diabetes Care (notably the FreeStyle Libre system), Structural Heart, Heart Failure, and Neuromodulation, as well as the recent acquisition of Cardiovascular Systems, Inc. (CSI).

The company acknowledges that the demand for COVID-19 tests is unpredictable, and its future impact on Abbott's business, financial condition, or results of operations remains uncertain. The significant decline in Q2 2023 sales highlights the transition away from pandemic-related revenue streams.

Abbott completed the acquisition of CSI for $851 million in April 2023. While CSI's revenue and earnings were not material to Abbott's consolidated results for the reported period, the acquisition strengthens Abbott's vascular device portfolio within the Medical Devices segment. The preliminary purchase price allocation resulted in significant goodwill and intangible assets, which will be finalized upon further valuation.