Abbott beat earnings and revenue forecasts for the first quarter and raised its full-year guidance Wednesday morning on the back of another company-leading period by its medical device unit, with fast-rising demand for products such as glucose monitor FreeStyle Libre driving the business to 5.5% growth on a reported basis.
Aside from higher than 34% growth of its diabetes business year over year, Abbott cited an expanded indication for MitraClip, adoption of its HeartMate 3 left ventricular assist device, and CE mark for its Alinity molecular diagnostics and test assay systems as bright spots for the quarter.
Weaker points included rhythm management and neuromodulation devices, both down more than 8.5%.
Abbott's device unit was a highlight for the company last year, with the 6.7% reported sales growth it achieved in the fourth quarter making it the strongest performing division and contributing to double-digit growth for 2018 as a whole.
A similar pattern played out in the first quarter. Abbott posted double-digit growth at its diabetes, electrophysiology and structural heart franchises once again. Heart failure also joined the list of areas in which Abbott achieved plus-10% growth. Adjusted diluted earnings per share from continuing operations came in at $0.63, a cent or two above the range forecast by Abbott and the analyst consensus.
MitraClip received an expanded indication to treat secondary mitral regurgitation in March. Abbott said it's in the process of pursuing expanded coverage from CMS, training more providers to grow to 550 total enabled sites in the U.S., and plans to roll out the fourth generation of the device in the second half of 2019. Building on its valve repair success, Abbott also said it had filed a CE mark for its tricuspid valve repair system, referred to as 'TriClip,' for which it plans to initiate a U.S. pivotal trial in the next few months.
Executives also said the company is aiming to take on the competitive U.S. transcatheter aortic valve replacement market in the first half of next year with the anticipated introduction of its Portico device.
As in previous quarters, the diabetes unit had the most explosive growth, largely as a result of demand for FreeStyle Libre. Sales of the glucose monitoring system grew 70.2% on a reported basis to $379 million, powering the wider diabetes unit to a 34.4% increase for the quarter. Abbott said an integrated continuous glucose monitor (iCGM) application has been filed with FDA for FreeStyle Libre 2, which received a CE mark last year. The company plans to add "significant new manufacturing capacity" for the device in the back half of this year.
The headwinds experienced by Abbott's medical device business in 2018 continued to play out in the first quarter of the new year. Rhythm management sales fell 8.5% on a reported basis, driven by a double-digit decline in the U.S. Sales of Abbott's neuromodulation devices were also down around 10% in the U.S., resulting in a worldwide decline of 8.9% on a reported basis at the long-struggling unit.
Abbott's diagnostics business had a mixed end to 2018, with rising demand for its Alinity family of diagnostic instruments offset by falling sales at the point-of-care unit. The start of 2019 continued the pattern. Core laboratory diagnostic sales grew 4.1% on a reported basis on the strength of uptake of Alinity products. But overall diagnostic sales were flat, in part because of declines at the molecular diagnostic and point-of-care businesses. Executives predicted second quarter growth in the middle to high-single digits in its core lab and molecular point of care diagnostics businesses, compared to low to mid-single digit growth in rapid diagnostics.
As expected, the performance of many of the units was negatively affected by foreign exchange. On a constant-currency basis, sales at the medical device and diagnostic units increased by 9.5% and 4.4%, respectively.
Abbott went into 2019 expecting the worst of the foreign exchange effects to hit it early in the year, leading it to predict EPS below the $0.64 forecast by analysts prior to the release of the company's guidance. Having come through the first quarter in better shape than expected, Abbott has increased the midpoint of its full year EPS outlook by 8%.
On the M&A front, CEO Miles White said while the company has worked to pay down its $25 billion buyout of St. Jude Medical in 2017, its not focused on acquisitions at the moment.
"I don't see a lot of meaningful adjunctive things that necessarily fit what we're trying to do," White told investors, but said that the company is "out of the range where we're constrained about our choices."
Maria Rachal contributed to this story.