- Abbott Laboratories on Wednesday reported fourth-quarter sales of $11.5 billion, a 7.7% increase on an organic basis from a year ago, driven by a surge in demand for COVID-19 tests and gains in its base business.
- CEO Robert Ford told investors on Wednesday's earnings call that demand for rapid tests has jumped, particularly in the U.S. as the omicron variant spread, and that Abbott delivered approximately 300 million diagnostics in the fourth quarter. Global COVID-19 testing-related sales were $2.3 billion in the three-month period. That's above the consensus range of $1.2 billion to $1.3 billion, and included $2.1 billion from Abbott's BinaxNOW, Panbio and ID NOW rapid-testing products.
- Looking ahead to 2022, Abbott provided full-year guidance that includes an initial COVID-19 testing-related sales forecast of $2.5 billion, which the company expects to occur early in the year and will update on a quarterly basis. Abbott is "seeing very strong demand for testing to start the year with the recent emergence of the omicron variant," Ford said, adding that test forecasting for more than a few months at a time has been challenging. Evercore ISI analysts in a Wednesday note commented that Abbott's "testing assumptions seem derisked" given the company's visibility into revenues.
Abbott and other diagnostics makers continue to benefit from surging COVID-19 test demand and are scaling up production. However, when demand will slow remains unclear.
Ford warned that the testing market remains volatile and is going to be challenging to forecast in 2022. CFO Robert Funck added that Abbott will update its test guidance "one quarter at a time" throughout the year.
"Every year there's a little bit of uncertainty in the beginning of the year. But, this year, there's probably a little bit more than usual," Ford said, while noting the macro challenges to forecasting including the omicron surge, healthcare-staffing shortages, supply-chain issues, inflation and currency challenges.
Another factor is the volatility of COVID-19 test demand and how that will "play out throughout the rest of the year," Ford added. At the same time, the CEO said he doesn't expect coronavirus testing "to simply go to zero starting the second quarter" and "there's potential for the upside of more Covid testing" for the remainder of 2022.
Excluding COVID-19 testing sales, Abbott's total fourth-quarter diagnostics sales rose 8.7% on an organic basis.
Abbott's medical-device business continued to recover in the fourth quarter from the impact of the pandemic. Global medical-device sales increased about 16% on an organic basis in the period.
"Especially in the more hospital-based business, we saw a real nice trajectory of recovery in the beginning of Q4," Ford said. "Q4 was looking like a continuation of that progression until probably December, where we saw a pretty big drop because of omicron in most of our device businesses."
The medtech's fourth-quarter revenue beat Wall Street's consensus estimate of $10.7 billion.
In Diabetes Care, FreeStyle Libre sales were $1 billion in the quarter, a 36% jump on an organic basis. Ford noted that Libre's overall sales were $3.7 billion in 2021.
The CEO said Libre now has 4 million users and is looking to geographically expand Libre 3 over the next couple of weeks "out of Germany and into the U.K. and France." In 2022, Ford said Abbott expects strong double-digit growth of at least 25% in a continuous glucose-monitoring market that he called "very under-penetrated."
Looking ahead overall to the first quarter, Abbott forecasts high-single-digit organic sales growth excluding the impact of COVID-19 testing sales. Ford told investors the company's initial full-year 2022 guidance for adjusted diluted earnings per share of $4.70 takes into account as much as possible a host of challenges.
J.P. Morgan analysts said in a note on Wednesday that Abbott's earnings-per-share target of at least $4.70 comes in modestly below consensus of $4.75, despite having higher coronavirus testing revenues of $2.5 billion versus about $1 billion baked in.
"Almost all the Covid testing revenues in 2022 guidance is assumed through March/April, meaning we'll likely see EPS upgrades throughout the year on higher testing sales," the analysts wrote.