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Abbott Emphasizes Base Business Growth as Q2 Dx Revenues Drop 46 Percent

This story has been updated with comments from the company's conference call to discuss its financial results.

NEW YORK – Despite a 46 percent decline in Diagnostics business revenues during the second quarter of 2023 due to decreasing COVID-19 testing sales, Abbott emphasized recovery and growth in its base business across all its segments.

During the recently completed quarter Abbott reported Diagnostics sales of $2.31 billion in Q2 2023 compared to $4.32 billion in the prior-year quarter. On an organic basis, Abbott's worldwide Diagnostics sales fell 45 percent. Excluding COVID-19 test sales, Diagnostics revenues grew 7 percent organically. 

Within Diagnostics, Core Laboratory Q2 revenues rose 6 percent to $1.29 billion from $1.22 billion in Q2 2022; Molecular revenues decreased 33 percent to $141 million from $212 million in Q2 2022; and Point of Care revenues increased 2 percent to $142 million from $139 million in the prior-year quarter. The firm reported $741 million in Rapid Diagnostics sales, a 73 percent decrease from Q2 2022 sales of $2.75 billion.

Global COVID-19 testing sales were $263 million in the second quarter of 2023, compared to $2.32 billion in the year-ago period, the firm said. The Diagnostics segment is showing "good recovery here as the health systems are opening up, [and] you're seeing routine testing come back," Abbott CEO Robert Ford said on a conference call to discuss the firm's financial results. In both the diagnostics and medical devices segments, the base business growth reflected improving market conditions, including hospital systems that are addressing previous bottlenecks.

The growth in diagnostics  – excluding COVID-19 testing – "reflects the increased demand for routine diagnostic testing globally," Ford said.

One area that recovered particularly well was the firm's US blood transfusion testing business, Ford said, as Abbott benefitted from  blood banks and blood donations rebounding  from historic lows during the COVID-19 pandemic.

The company is also continuing to direct its R&D spending to close gaps in its testing menu, Ford said. While a portion of the diagnostics business was focused on COVID-19 testing during the pandemic, Ford said that the segment was also developing new assays to expand the menu for  the firm's key instruments. That menu expansion is a "very important strategic driver" for the company, with molecular diagnostics being a key area of focus, he said.

For the three months ended June 30, the Abbott Park, Illinois-based firm reported overall Q2 revenues of $9.98 billion, down 11 percent from $11.26 billion in Q2 2022, or down 9 percent on an organic basis. The company beat the consensus Wall Street estimate of $9.70 billion.

Excluding COVID-19 testing-related sales, total revenues were up nearly 12 percent on an organic basis.

The "broad-based" base business growth is "not focused on one specific area, one geographic area, it's across the entire portfolio," Ford said. Its acceleration was "driven by improving market conditions and contributions from both new products and legacy growth platforms."

In Abbott's other businesses, Nutrition sales grew 6 percent to $2.08 billion; Established Pharmaceuticals grew 5 percent to $1.29 billion; and Medical Devices grew nearly 14 percent to $4.30 billion.

Abbott reported Q2 net earnings of $1.38 billion, or $.78 per share, compared to net earnings of $2.02 billion, or $1.14 per share, in the year-ago period. On an adjusted basis, EPS was $1.08, topping analysts' consensus estimate of $1.05.

For full-year 2023, Abbott anticipates organic sales growth, excluding COVID-19 testing-related sales, to be in the low double digits, diluted earnings per share of $3.02 to $3.22, and adjusted EPS to be between $4.30 and $4.50. The adjusted EPS forecast remains unchanged but "reflects an increased outlook for the underlying base business offset by a lower forecasted earnings contribution from COVID-19 testing-related sales," the company said in a statement.

For Q3 Abbott is forecasting total underlying base business organic sales growth, excluding COVID-19 testing sales, to be in the low double digits, CFO Bob Funck said on the conference call. Adjusted EPS is anticipated to be  approximately $1.10.

The company also expects about $1.3 billion in COVID-19 testing sales for the full-year 2023, down from $1.5 billion forecasted in April due to lower testing demand after the end of the public health emergency in the US, Funck said. Abbott anticipates about $100 million in COVID-related sales for the third quarter, he added.

In Thursday afternoon trading on the New York Stock Exchange, shares of Abbott were up 4 percent at $111.53.