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Abbott Laboratories (ABT - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of 98 cents, which topped the Zacks Consensus Estimate by 2.1%. However, the adjusted figure decreased 4.9% from the prior-year quarter’s level. The quarter’s adjustments include 28 cents of certain non-recurring items.
GAAP EPS came in at 70 cents, down 6.7% year over year.
First-quarter worldwide sales of $9.96 billion were up 2.2% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.2%.
Organically, sales improved 4.7% year over year. On an organic basis (excluding the impact of COVID-19 testing sales), sales rose 10.8% year over year in the reported quarter.
Q1 Results in Detail
Abbott operates through four segments — Established Pharmaceuticals, Medical Devices, Nutrition and Diagnostics.
In the first quarter, Established Pharmaceuticals’ product sales increased 3.1% on a reported basis (up 13.7% on an organic basis) to $1.23 billion.
Organic sales in key emerging markets improved 15.4% year over year. This was led by growth in several geographies and therapeutic areas, including respiratory, women's health and central nervous system/pain management.
The Medical Devices segment’s sales rose 14.2% year over year on a reported basis (up 14.3% on an organic basis) to $4.45 billion.
Sales growth was led by double-digit growth in Diabetes Care, Electrophysiology, Neuromodulation and Structural Heart. Several recently launched products and new indications contributed to the strong performance, including Amplatzer Amulet, Navitor, TriClip and AVEIR.
Abbott Laboratories Price, Consensus and EPS Surprise
The Diabetes Care division reported organic sales growth of 20.7% year over year, led by FreeStyle Libre, which contributed $1.5 billion to revenues in the reported quarter. Structural Heart sales rose 13%. Heart Failure sales improved 8.4% year over year organically.
The Vascular division recorded organic sales growth of 5.8% in the quarter under review. The Electrophysiology, Rhythm Management and Neuromodulation divisions recorded organic growth of 18.4%, 7.5% and 17.4%, respectively, in the quarter under review.
Nutrition sales rose 5.1% year over year on a reported basis (up 7.7% on an organic basis) to $2.07 billion.
Pediatric Nutrition sales registered 10.5% growth on an organic basis. Adult Nutrition sales improved 5.3% organically. Per the company, Adult Nutrition sales benefited from the strong global sales performance of Abbott's market-leading complete and balanced nutrition brand, Ensure.
Diagnostics sales were down 17.6% year over year on a reported basis (down 15.5% on an organic basis) to $2.21 billion.
Core Laboratory Diagnostics sales were up 5.9% organically. Molecular Diagnostics declined 11.7% on an organic basis. Rapid Diagnostics sales plunged 38.7% on an organic basis, whereas Point of Care Diagnostics sales rose 3.6% organically.
Margins
In the first quarter, the gross profit rose 1.6% year over year to $5.50 billion despite a 3.1% increase in the cost of products sold (excluding amortization expense). However, the gross margin contracted 36 basis points (bps) to 55.2%.
Selling, general and administration expenses were up 7.1% year over year to $2.96 billion. Research and development expenses increased 4.6% year over year to $684 million. The company reported an adjusted operating profit of $1.86 billion in the quarter under review, down 7.1% year over year. Also, the adjusted operating margin fell by 187 bps to 18.6%.
2024 Guidance
Abbott provided an updated guidance for 2024.
Full-year adjusted earnings (excluding specified items of $1.30 per share) are expected in the range of $4.55-$4.70 (previously $4.50-$4.70) per share. The Zacks Consensus Estimate is pegged at $4.62.
Full-year 2024 organic sales growth, excluding COVID-19 testing-related sales, is expected in the range of 8.5%-10% (earlier 8%-10%). The Zacks Consensus Estimate for sales is currently pegged at $41.91 billion.
Our Take
Abbott delivered better-than-expected earnings and revenues for the first quarter of 2024. The company achieved double-digit organic sales growth in its underlying base business for the fifth consecutive quarter, particularly with strong results in Medical Devices and Established Pharmaceuticals. The updated outlook for the full-year sales and EPS also looks promising.
The company had a strong start to the year, headlining on multiple occasions. Some of the notable developments include the launch of the PROTALITY brand for people pursuing weight loss and securing the CE Mark approval of Insulet’s Omnipod 5 Automated Insulin Delivery System integration with Abbott’s FreeStyle Libre 2 Plus Sensor. The company also completed enrollment in the Volt CE Mark clinical study, designed to evaluate the Volt Pulsed Field Ablation system for treating patients with heart rhythm disorders. All these developments bode well for the company for the coming months.
On the flip side, the contraction of both gross and adjusted operating margins in the quarter is discouraging. Abbott’s Diagnostics sales growth continues to be negatively impacted by the year-over-year declines in COVID-19 testing-related sales.
Zacks Rank and Other Key Picks
Abbott currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Inspire Medical Systems (INSP - Free Report) , Insulet (PODD - Free Report) and Exact Sciences (EXAS - Free Report) .
Inspire Medical Systems, sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2023 EPS of 49 cents, which beat the Zacks Consensus Estimate of a loss of 4 cents. Revenues of $192.5 million topped the consensus estimate by 0.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inspire Medical Systems has an estimated earnings growth rate of 51.4% in 2024 compared with the industry’s 19.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 353.6%.
Insulet, carrying a Zacks Rank #2, reported a fourth-quarter 2024 adjusted EPS of $1.40, which surpassed the Zacks Consensus Estimate by 108.9. Revenues of $509.8 million outpaced the Zacks Consensus Estimate by 10.8%.
PODD has an estimated long-term earnings growth rate of 18.1% compared to the industry’s 11.4%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 100.1%.
Exact Sciences, carrying a Zacks Rank #2, reported a fourth-quarter 2024 loss of 27 cents per share, narrower than the Zacks Consensus Estimate of a loss of 53 cents. Revenues of $646.9 million topped the Zacks Consensus Estimate by 2.4%.
EXAS has an estimated earnings growth rate of 23.8% in 2024 compared with the industry’s 13.1% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 51.5%.
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Abbott (ABT) Q1 Earnings Beat Estimates, Margins Contract
Abbott Laboratories (ABT - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of 98 cents, which topped the Zacks Consensus Estimate by 2.1%. However, the adjusted figure decreased 4.9% from the prior-year quarter’s level. The quarter’s adjustments include 28 cents of certain non-recurring items.
GAAP EPS came in at 70 cents, down 6.7% year over year.
First-quarter worldwide sales of $9.96 billion were up 2.2% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.2%.
Organically, sales improved 4.7% year over year. On an organic basis (excluding the impact of COVID-19 testing sales), sales rose 10.8% year over year in the reported quarter.
Q1 Results in Detail
Abbott operates through four segments — Established Pharmaceuticals, Medical Devices, Nutrition and Diagnostics.
In the first quarter, Established Pharmaceuticals’ product sales increased 3.1% on a reported basis (up 13.7% on an organic basis) to $1.23 billion.
Organic sales in key emerging markets improved 15.4% year over year. This was led by growth in several geographies and therapeutic areas, including respiratory, women's health and central nervous system/pain management.
The Medical Devices segment’s sales rose 14.2% year over year on a reported basis (up 14.3% on an organic basis) to $4.45 billion.
Sales growth was led by double-digit growth in Diabetes Care, Electrophysiology, Neuromodulation and Structural Heart. Several recently launched products and new indications contributed to the strong performance, including Amplatzer Amulet, Navitor, TriClip and AVEIR.
Abbott Laboratories Price, Consensus and EPS Surprise
Abbott Laboratories price-consensus-eps-surprise-chart | Abbott Laboratories Quote
The Diabetes Care division reported organic sales growth of 20.7% year over year, led by FreeStyle Libre, which contributed $1.5 billion to revenues in the reported quarter. Structural Heart sales rose 13%. Heart Failure sales improved 8.4% year over year organically.
The Vascular division recorded organic sales growth of 5.8% in the quarter under review. The Electrophysiology, Rhythm Management and Neuromodulation divisions recorded organic growth of 18.4%, 7.5% and 17.4%, respectively, in the quarter under review.
Nutrition sales rose 5.1% year over year on a reported basis (up 7.7% on an organic basis) to $2.07 billion.
Pediatric Nutrition sales registered 10.5% growth on an organic basis. Adult Nutrition sales improved 5.3% organically. Per the company, Adult Nutrition sales benefited from the strong global sales performance of Abbott's market-leading complete and balanced nutrition brand, Ensure.
Diagnostics sales were down 17.6% year over year on a reported basis (down 15.5% on an organic basis) to $2.21 billion.
Core Laboratory Diagnostics sales were up 5.9% organically. Molecular Diagnostics declined 11.7% on an organic basis. Rapid Diagnostics sales plunged 38.7% on an organic basis, whereas Point of Care Diagnostics sales rose 3.6% organically.
Margins
In the first quarter, the gross profit rose 1.6% year over year to $5.50 billion despite a 3.1% increase in the cost of products sold (excluding amortization expense). However, the gross margin contracted 36 basis points (bps) to 55.2%.
Selling, general and administration expenses were up 7.1% year over year to $2.96 billion. Research and development expenses increased 4.6% year over year to $684 million. The company reported an adjusted operating profit of $1.86 billion in the quarter under review, down 7.1% year over year. Also, the adjusted operating margin fell by 187 bps to 18.6%.
2024 Guidance
Abbott provided an updated guidance for 2024.
Full-year adjusted earnings (excluding specified items of $1.30 per share) are expected in the range of $4.55-$4.70 (previously $4.50-$4.70) per share. The Zacks Consensus Estimate is pegged at $4.62.
Full-year 2024 organic sales growth, excluding COVID-19 testing-related sales, is expected in the range of 8.5%-10% (earlier 8%-10%). The Zacks Consensus Estimate for sales is currently pegged at $41.91 billion.
Our Take
Abbott delivered better-than-expected earnings and revenues for the first quarter of 2024. The company achieved double-digit organic sales growth in its underlying base business for the fifth consecutive quarter, particularly with strong results in Medical Devices and Established Pharmaceuticals. The updated outlook for the full-year sales and EPS also looks promising.
The company had a strong start to the year, headlining on multiple occasions. Some of the notable developments include the launch of the PROTALITY brand for people pursuing weight loss and securing the CE Mark approval of Insulet’s Omnipod 5 Automated Insulin Delivery System integration with Abbott’s FreeStyle Libre 2 Plus Sensor. The company also completed enrollment in the Volt CE Mark clinical study, designed to evaluate the Volt Pulsed Field Ablation system for treating patients with heart rhythm disorders. All these developments bode well for the company for the coming months.
On the flip side, the contraction of both gross and adjusted operating margins in the quarter is discouraging. Abbott’s Diagnostics sales growth continues to be negatively impacted by the year-over-year declines in COVID-19 testing-related sales.
Zacks Rank and Other Key Picks
Abbott currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Inspire Medical Systems (INSP - Free Report) , Insulet (PODD - Free Report) and Exact Sciences (EXAS - Free Report) .
Inspire Medical Systems, sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2023 EPS of 49 cents, which beat the Zacks Consensus Estimate of a loss of 4 cents. Revenues of $192.5 million topped the consensus estimate by 0.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Inspire Medical Systems has an estimated earnings growth rate of 51.4% in 2024 compared with the industry’s 19.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 353.6%.
Insulet, carrying a Zacks Rank #2, reported a fourth-quarter 2024 adjusted EPS of $1.40, which surpassed the Zacks Consensus Estimate by 108.9. Revenues of $509.8 million outpaced the Zacks Consensus Estimate by 10.8%.
PODD has an estimated long-term earnings growth rate of 18.1% compared to the industry’s 11.4%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 100.1%.
Exact Sciences, carrying a Zacks Rank #2, reported a fourth-quarter 2024 loss of 27 cents per share, narrower than the Zacks Consensus Estimate of a loss of 53 cents. Revenues of $646.9 million topped the Zacks Consensus Estimate by 2.4%.
EXAS has an estimated earnings growth rate of 23.8% in 2024 compared with the industry’s 13.1% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 51.5%.