Q1 insights: Abbott reported lower revenue and net profits in the first quarter, dragged down by a sharp fall in sales of COVID-19 tests, but a recovery in surgical procedures using its medical devices prompted the company to predict a stronger full-year performance in its base business.
Hospitals are starting to get a handle on staffing shortages, which is supporting growth in both procedures and routine diagnostic testing volumes, Abbott CEO Robert Ford said on the company’s earnings call.
The company reported first-quarter organic sales growth of 10% for its underlying base business.
“We think investors were already prepared for the likely impact of lower COVID testing sales given recent trends, so we view the elevated outlook on the top and bottom lines for the core business as the main takeaway here and view this as a solid print from Abbott,” J.P. Morgan analyst Robbie Marcus said in a research note.
Ford said people are prioritizing getting healthy, a trend he called an important behavioral shift in healthcare globally.
“For our businesses, the impacts have been increased routine diagnostic testing volumes, improved medical device procedure trends, and strong demand for consumer-based health products,” Ford said on the call.
“It’s a real good, strong start to the year. I think it’s very sustainable,” he added.
FreeStyle Libre: Sales of the FreeStyle Libre continuous glucose monitors reached $1.2 billion in the first quarter, growing 50% in the U.S., Abbott said.
In April, Medicare expanded coverage for continuous glucose monitors.
Third Bridge analyst George Congdon said Abbott’s diabetes business will help drive near-term results despite the declining Covid-19 testing revenues.
“This news is particularly well received given the FDA’s 2023 clearance of the Freestyle Libre 2 and 3 sensors to integrate with autonomous insulin delivery systems, which will pave the way for Abbott to partner with Insulet’s newly launched Omnipod 5 insulin pump, the current standard of care on the market,” Congdon said in a research note.
Abbott said it is partnering with leading insulin pump manufacturers to integrate their systems with FreeStyle Libre 2 and 3 devices as soon as possible.
Heart, neuromodulation: In addition to diabetes care, Abbott said the 8.5% increase in its worldwide medical device sales on a reported basis was led by new product launches and indications that drove double-digit organic growth in structural heart, heart failure and neuromodulation.
Sales of the CardioMEMS implantable sensor to track heart failure symptoms grew more than 30%, Abbott said.
The company also highlighted data showing its TriClip device was superior to medical therapy in treating patients with a leaky tricuspid heart valve, and FDA approval for the Proclaim XR spinal cord stimulation system to treat diabetic peripheral neuropathy.
Outlook: Abbott left its profit forecast unchanged, predicting full-year 2023 GAAP earnings from continuing operations of $3.05 to $3.25 per share. The outlook now includes a projection for an increased contribution from the underlying base business, offset by an expected decline in sales of COVID-19 tests.
Excluding one-time items, projected adjusted full-year earnings from continuing operations would be $4.30 to $4.50, the company said.
Abbott now projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, of at least high single-digits, and COVID-19 testing sales of about $1.5 billion.