Abbott Labs' fourth-quarter sales top estimates amid strong medical-device demand

By Eleanor Laise

Company turns focus to core businesses as COVID-testing sales plummet

Abbott Laboratories' stock (ABT) fell 2% premarket on Wednesday after the healthcare-products company reported fourth-quarter sales that topped expectations amid strength in its medical-device and nutrition segments, even as COVID-test sales continued to plunge.

The company reported fourth-quarter net income of $1.59 billion, or 91 cents per share, versus $1.03 billion, or 59 cents per share, in the year-earlier period. Adjusted per-share earnings came to $1.19, matching the FactSet consensus. Sales totaled $10.241 billion in the quarter, up 1.5% from a year earlier and beating the FactSet consensus of $10.186 billion.

Analysts have been looking to elevated medical-procedure volumes to help boost Abbott's medical-device business, which makes pacemakers, stent systems and other products. Total reported fourth-quarter medical-device sales grew 17.5% from a year earlier, Abbott said Wednesday, while sales of FreeStyle Libre continuous glucose monitors jumped 25.5%.

Abbott is wrapping up a transitional year as it pivots away from the sharply declining COVID testing business and refocuses on its core segments, looking to products like its continuous glucose monitors to help drive future growth. COVID testing-related sales came to $288 million in the fourth quarter, down from $1.07 billion a year earlier.

The company is aiming to roughly double its annual FreeStyle Libre sales, to $10 billion, by 2028. More than 5 million people worldwide use the device, but there are more than 500 million people globally with diabetes, "so we've just begun to scratch the surface," Abbott CEO Robert Ford said earlier this month at the J.P. Morgan healthcare conference in San Francisco.

Abbott is also looking to drive growth in the segment through new advances that let Libre connect with automated insulin-dosing pumps. The company announced earlier this month that the FreeStyle Libre 2 Plus sensor would integrate with a Tandem Diabetes Care Inc. (TNDM) insulin pump to help people with diabetes predict and prevent abnormal blood-sugar levels.

While the popularity of anti-obesity medications such as Novo Nordisk's (NVO) Wegovy and Eli Lilly & Co.'s (LLY) Zepbound has weighed on the shares of diabetes device makers lately, Abbott has worked to persuade investors that it may actually benefit from the trend. The company released data last year showing that the number of people using FreeStyle Libre while taking GLP-1 drugs has grown significantly and that adherence to the sensor is higher among people taking the medications.

Abbott is also looking to address the GLP-1 market in its nutrition business, which makes the nutritional supplement drink Ensure and other products. As many people taking GLP-1s face unwanted muscle loss, Abbott is pursuing advances that could "offset or partially mitigate some of those side effects," Ford said at the J.P. Morgan conference.

For the full year 2024, Abbott is expecting adjusted earnings per share in the range of $4.50 to $4.70, and organic sales growth, excluding COVID testing, in the range of 8% to 10%, the company said Wednesday.

Abbott shares have gained 1.3% in the past 12 months, while the S&P 500 SPX is up 21%.

-Eleanor Laise

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01-24-24 0757ET

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