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Abbott Q1 Diagnostics Revenues Rise 59 Percent, 6 Percent Organically

NEW YORK (360Dx) – Abbott reported Wednesday morning that its first quarter year-over-year sales in its Diagnostics business grew 59 percent on a reported basis, or 6 percent on an organic basis excluding current and prior-year results for its rapid diagnostics business purchased with Alere in October 2017.

For the three months ended March 31, Abbott reported overall Q1 revenues of $7.39 billion, up 17 percent from $6.34 billion in Q1 of 2017 and beating the analysts' estimate of $7.29 billion.

On an organic basis, Abbott's overall sales grew 7 percent year over year, excluding prior-year results for the Abbott Medical Optics and St. Jude Medical vascular closure businesses, which it divested during the first quarter of 2017; the current and prior-year results for rapid diagnostics; and the impact of foreign exchange.

Sales in the company's Diagnostics segment rose to $1.84 billion compared to $1.16 billion in Q1 2017.  

Within the Diagnostics business, core laboratory revenues were $1.02 billion, up 12 percent from $911 million in the prior-year quarter, or 6 percent organically. Revenues included a favorable 6 percent effect from foreign exchange and reflected continued above-market growth driven by share gains in the US and internationally, Abbott said.

The firm's molecular revenues were $118 million, up 5 percent from $112 million in Q1 2017, or 1 percent organically. The revenues included a favorable 4 percent effect from foreign exchange. Strong growth in infectious disease testing, the firm's core area of focus in the molecular diagnostics market, was partially offset by a planned scale down in other testing areas, mostly in the US, Abbott said.

Point-of-care revenues were $141 million, up 4 percent from $135 million in the prior-year quarter, or 4 percent on an organic basis. The revenues included a favorable 1 percent effect from foreign exchange and strong international growth of the i-STAT handheld system, Abbott said.

Rapid diagnostics worldwide sales of $559 million were led by infectious disease testing, including strong flu and strep testing volumes in the US.

Abbott CEO Miles White said in a conference call to discuss the company's financial report that the firm is hitting its stride with the completion of its menu offerings on its Alinity line of next-generation diagnostic analyzers and tests, particularly in Europe. "With these large systems and their multi-test menus, it's really important to have full menus at launch," he said, adding that the firm is investing in expansion of its Alinity sales, installation, support, and service teams.

White noted that "the bulk of the integration" of Alere is complete and that the firm is tracking well with its projections for synergies.

"It's been a blessing [that] there's been a particularly strong flu season," White said. Probably 15 percent of Alere's sales are seasonal and dependent on drivers such as the flu season, he noted. White also said that Alere has many products that had been undermarketed.

On the call, Abbott's CFO Brian Yoor said that the firm expects its Alere rapid diagnostics business to contribute sales of slightly more than $2 billion in 2018 and $500 million in the second quarter.

Abbott reported net earnings of $418 million, or $.23 per share, in Q1 compared to $419 million, or $.24 per share, in the year-ago period. Adjusted EPS was $.59, at the upper end of the company's previous guidance range and beating analysts' consensus estimate of $0.58.

The firm spent $589 million on R&D in Q1, up 7 percent from $553 million in Q1 2017, and logged $2.54 billion in SG&A expenses, up 4 percent year over year from $2.44 billion in the prior-year quarter.

Abbott projected 2018 diluted earnings per share from continuing operations of $1.23 to $1.33. Excluding specified items, it projected adjusted diluted earnings per share from continuing operations of $2.80 to $2.90 for 2018.

Abbott projected second-quarter 2018 guidance for diluted earnings per share from continuing operations of $0.33 to $0.35. Excluding specified items, it estimated adjusted diluted earnings per share from continuing operations of $0.70 to $0.72 for the second quarter.

In Wednesday morning trade on the New York Stock Exchange, shares of Abbott were down slightly more than 1 percent at $59.00.