- Abbott Laboratories on Thursday reported second-quarter sales of $10.2 billion, a 35% increase on an organic basis from a year ago, driven by medical devices and what the company characterized as a continued recovery from the impact of the COVID-19 pandemic.
- Medical device sales jumped 51.3% year over year compared to a 13.1% rise in the first quarter over a year ago, with double-digit growth in electrophysiology, heart failure, structural heart and diabetes care. While Abbott benefited from strong growth across its four major businesses, beating Street revenue forecasts by $550 million, coronavirus-related testing sales came in at $1.3 billion, far below the $2.2 billion it reported in the first quarter, though ahead of lowered expectations midway through the quarter.
- Abbott last month cut its full-year outlook blaming global vaccination efforts for a sharp decline in demand for its COVID-19 diagnostics. The company forecasts about $4 billion to $4.5 billion in COVID-19 testing sales in 2021. "We gave guidance about a month ago," CEO Robert Ford said during Thursday's earnings call. "After the two quarters, we're about $3.5 billion so we've got between $500 million and $1 billion to go in the next six months. That's really the question here: how will testing play itself out in the next second half?"
Abbott's medical device business, including its cardiac rhythm management and structural heart units, continues to benefit from the easing of the COVID-19 crisis, despite growing concerns from public health officials about the emergence of the delta variant.
Abbott joined Intuitive Surgical and Johnson & Johnson in this first week of the medtech earnings season adding to positive reports on the pace of recovery in overall procedure volumes.
Like J&J, Abbott saw medical device sales return to pre-pandemic levels in the second quarter as the coronavirus impact continued to wane. Compared to pre-pandemic sales in 2019, Abbott's medical device sales increased 15.6% on an organic basis in the second quarter.
"We're seeing this kind of sequential recovery in the procedures as evidenced by our growth rates," Ford told investors. "The first couple weeks of July are showing that same trajectory."
Ford said that the recovery in the second quarter played out "a little bit better" than what Abbott anticipated. Medical device sales of $3.69 billion in the quarter was $173 million above the Street, according to analysts at J.P. Morgan, who noted beats of $37 million in cardiac rhythm management, $25 million in both structural heart and electrophysiology, $13 million in heart failure, as well as $7 million in neuromodulation.
Among the specific product highlights: in structural heart, MitraClip sales increased 82.1% on an organic basis in the second quarter compared to the prior year, while diabetes care sales of FreeStyle Libre and Libre Sense were up 42.9% on an organic basis compared to last year. Diabetes sales came in $40 million ahead of Street estimates.
Despite the increase in COVID-19 cases driven by the delta variant, Ford said the company is not seeing hospitals halting procedures in response to the new outbreaks of the virus. "It's a very different situation where we are this year versus where we were last year," the CEO observed.
However, the environment for Abbott's COVID-19 testing business in the second quarter is not as rosy as it was in 2020.
For months, the diagnostics industry has been reporting a softening in demand for coronavirus tests due to the rollout globally of vaccines. Qiagen earlier this month joined Abbott and Quidel in cutting its 2021 outlook as COVID-19 test demand wanes.
Abbott's COVID-19 testing-related sales were $1.3 billion in the second quarter, above the Street estimate of $1 billion. Jefferies analysts in a note commented that the second-quarter results for coronavirus diagnostics imply $500 million to $1 billion in sales for the second half of 2021 "which is conservative" based on still elevated cases in select regions outside of the U.S., among other dynamics.
Ford told investors the third quarter and fourth quarter of 2020 "was really the height of our ramp-up in COVID sales" for Abbott. Still, Ford contends that the company's underlying diagnostics business, excluding coronavirus sales, "will be getting sequentially better every quarter" with double-digit growth expected for the rest of the year.