Q3 trends: Abbott Laboratories faced “a very challenging quarter… probably our most challenging,” CEO Robert Ford said Wednesday on an earnings call. The company, like its medtech peers, is grappling with hospital staffing shortages, foreign-exchange rate fluctuations and continued supply chain disruptions.
“Inflation continues to be a stubborn force globally, but we’ve started to see some moderating impacts in certain parts of our business compared to earlier in the year,” Ford said. “COVID remains as unpredictable as ever with intermittent surges continuing throughout the world.”
Those challenges were offset by higher-than-expected sales of COVID-19 tests, leading the company to raise its earnings forecast for 2022.
Abbott launched its FreeStyle Libre 3 continuous glucose monitor in the third quarter. The company also reopened its baby formula plant in Sturgis, Mich. following an investigation of bacterial infections in infants.
Medtech: Supply constraints and pandemic-related lockdowns in China affected medical device sales.
The company reported double-digit growth in electrophysiology, structural heart products and diabetes care in the U.S. Ford said that while cardiovascular procedure volumes were soft in July, they strengthened in August and September.
The company said it’s working to fulfill about $70 million in backorders across its devices, with electrophysiology products particularly affected by supply constraints.
Sales of Abbott’s Freestyle Libre products totaled about $1 billion in the quarter, falling short of estimates of $1.1 billion, analyst J.P. Morgan analyst Robbie Marcus wrote in a Wednesday research note. Sales of diabetes products in the U.S. climbed more than 40%, while supply constraints with the company’s first-generation FreeStyle Libre device reduced international sales.
Diagnostics: Sales of COVID-19 tests brought in $1.7 billion in the quarter, “significantly” above the company’s expectations, but still lower than last year, Ford said. Demand for laboratory-based tests has declined, while sales of at-home rapid tests were about on par with the third quarter of 2021.
Rapid-test sales accounted for the majority of the total, about $1.6 billion, beating J.P. Morgan analysts’ estimates of $769 million, Marcus wrote.
“Right now it’s looking like COVID test sales are stickier than most of us assumed,” Ford said.
Forecast: Abbott raised its earnings forecast for 2022 and now expects diluted earnings per share of $3.75 to $3.81. That assumes $7.8 billion in COVID-19 testing sales for the full year, including about $500 million in the fourth quarter.
Abbott previously forecast COVID-19 testing-related sales of $6.1 billion.
Foreign-exchange rates: CFO Bob Funck, noting that most multinational corporations are struggling with an increasingly strong dollar, called the impact of foreign-exchange rates “a little bit under-appreciated in terms of the impact here,” noting that “there's certainly going to be a limit here in terms of what can be done” to alleviate the effect of higher local prices on sales.
Shares of Abbott fell 7% to $97.68 in morning trading in New York. They have dropped 17% in the past year.