- Abbott Laboratories on Wednesday reported fourth-quarter sales of $10.7 billion, including $2.4 billion generated by COVID-19 diagnostic testing, beating consensus expectations of $9.9 billion.
- The company's 110% jump in diagnostics sales compared to the prior year was driven by strong demand for its rapid antigen and PCR-based coronavirus tests. CEO Robert Ford told investors on Wednesday's earnings call that he sees "sustainability" in 2021 for testing despite the rollout of COVID-19 vaccines.
- Abbott's medical device business was flat in the quarter due to reduced cardiovascular and neuromodulation procedure volumes amid a global pandemic resurgence. Diabetes care, which grew 41.3% in the quarter led by its FreeStyle Libre continuous glucose monitoring system, was a bright spot.
Abbott was helped as well as hurt in the fourth quarter from the impact of the pandemic. However, the company's overall strong performance with 28.7% sales growth was fueled by its diagnostics business, which delivered more than 300 million coronavirus tests in the quarter.
Of the $2.4 billion in COVID-19 testing-related sales in the quarter, $1.9 billion was generated from Abbott's BinaxNOW, Panbio and ID NOW rapid testing platforms. The company has ramped up its manufacturing capacity for rapid tests and currently produces a total of more than 100 million BinaxNOW and Panbio tests per month.
Ford said he doesn't believe testing demand has peaked yet and there is sufficient manufacturing capacity for Abbott to "be able to meet this kind of growing demand right now."
J.P. Morgan analysts in a Wednesday note wrote that with $1.9 billion in fourth-quarter sales of BinaxNOW and Panbio "there’s much more durability on COVID testing vs. Street models in 2021 and beyond."
Also on the positive side of the ledger, Abbott reported double-digit growth in diabetes care driven by its FreeStyle Libre CGM system. Ford called out the fact that Libre sales in the U.S. grew 50% in 2020 and 40% internationally, exceeding $2 billion in global sales for the full year.
"In 2021, we're forecasting continued strong double-digit growth in our diabetes care business led by FreeStyle Libre," Ford said.
At the same time, Ford noted that medical device sales were "relatively flat" in the fourth quarter with a 1.7% increase on a reported basis and 0.4% decrease on an organic basis.
While Abbott benefited from double-digit growth in diabetes care, he said that strong performance was offset by lower sales in its cardiovascular and neuromodulation businesses due to "challenging conditions" as COVID-19 cases surged in some geographies toward the end of the quarter, negatively impacting procedure volumes.
"The balance of the business fell short vs. somewhat stale Street consensus with misses of $5M in CRM, $39M in EP, $21M in Heart Failure, $49M in Structural Heart, and $14M in Neuromodulation," J.P. Morgan analysts noted.
Ford said Abbott expects cardiovascular and neuromodulation procedure volumes to improve as coronavirus case rates subside and is forecasting in 2021 "steady improvements" in those businesses "as society works its way through COVID-19."
Abbott on Wednesday also reported full-year 2020 financial results including organic sales growth of nearly 10% despite the pandemic, which Ford called the "single most disruptive healthcare event in our lifetimes."
Nonetheless, Ford said Abbott exited 2020 with "tremendous momentum." Looking ahead, Abbott on Wednesday issued a 35% earnings-per-share growth forecast for 2021 compared to last year.
J.P. Morgan analysts said that $5 in 2021 EPS is "well ahead of what we had expected Abbott to feel comfortable putting out there."