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Abbott Q4 Diagnostics Revenues up 5 Percent, MDx Revenues Decline

Note: This article has been updated with additional information from Abbott's earnings call. 

NEW YORK — Abbott reported Wednesday that its fourth quarter diagnostics revenues rose 5 percent year over year.

For the three months ended Dec. 31, the Abbott Park, Illinois-based firm reported overall revenues of $8.31 billion, up 7 percent from $7.77 billion a year ago and beating the consensus Wall Street estimate of $8.26 billion. Organic sales, which excluded the impact of foreign exchange, grew 9 percent year over year.

Abbott said revenues from its diagnostics business rose 5 percent from the prior-year quarter to $2.1 billion from $1.96 billion. Within diagnostics, core laboratory revenues grew 8 percent to $1.25 billion from $1.15 billion; molecular revenues fell 6 percent to $116 million from $123 million; point-of-care revenues were essentially flat at $137 million; and rapid diagnostics revenues were $556 million, up 2 percent from $548 million in the prior-year quarter.

Abbott CEO Miles White noted in a conference call to discuss the company's earnings that the diagnostics growth has been driven in part by the continued rollout of Abbott's Alinity family of diagnostics instruments in Europe. In July, the US Food and Drug Administration approved the company's Alinity s System for use with screening in blood and plasma centers. White also said the company has "made significant progress obtaining regulatory approvals for a critical mass" of Abbott's immunoassay and clinical chemistry test menu.

When asked about Abbott's ability to sustain revenue growth, Robert Ford, the company's COO said the company has "all the elements" to sustain high growth rates going forward. Those elements include a robust pipeline in diagnostics with the Alinity system and in medical devices with the Libre continuous glucose monitoring system for diabetes, both of which he cited as growth drivers. Ford will take over as Abbott's CEO in April.

Ford said the company will continue to rollout the Alinity platform in 2020, noting that it was easier to launch in Europe because there was a more complete assay menu. Ford said he expects to see the same growth rate for the Alinity in the US now that the assay menu is more expansive.

Revenues of Abbott's nutrition business rose 5 percent to $1.87 billion from $1.78 billion; established pharmaceuticals revenues rose 8 percent to $1.17 billion from $1.10 billion; and medical devices revenues rose 10 percent to $3.2 billion from $2.92 billion.

Abbott reported net earnings of $1.05 billion, or $.59 per share, in Q4 2019, compared to $654 million, or $.37 per share, in the year-ago period. Adjusted EPS for the recently completed quarter was $.95, matching analysts' consensus estimate.

The firm spent $595 million on R&D in Q4 2019, up 6 percent from $562 million in Q4 2018, and logged $2.41 billion in SG&A expenses, up 2 percent from $2.36 billion in the prior-year quarter.

For full-year 2019, the firm reported total revenues of $31.9 billion, up 4 percent from $30.58 billion a year ago, and in line with the average Wall Street estimate of $31.85 billion.

Abbott reported $7.71 billion in diagnostics revenues in 2019, up 3 percent from $7.50 billion in 2018 and up 6 percent on an organic basis.

Within diagnostics, molecular diagnostics revenues totaled $442 million in 2019, down 9 percent from $484 million in 2018. Core laboratory revenues were $4.66 billion, up 6 percent from $4.39 billion in 2018. Point-of-care revenues were $561 million, up 2 percent from $553 million a year ago, and rapid diagnostics revenues were $2.05 billion, down less than a percent from $2.07 billion in 2018.

The rapid diagnostics business, which was reorganized after Abbott's acquisition of Alere in 2017, was a mixed bag according to Ford. The infectious disease portfolio in developed markets has done well, particularly in the US, thanks to the opportunities provided by the flu season and continued expansion beyond the flu vaccine. Ford also noted the cardiometabolics business has grown in the high single digits and low double digits.

However, the infectious disease segment in emerging markets had a rough 2019, due partially to NGO purchasing cycles. As a result, Ford said the company is looking at other emerging markets outside of Africa. Ford also said Abbott hasn't fully maximized the value of its toxicology business, and is implementing new strategies to grow those areas.

In other business units, 2019 nutrition revenues rose 3 percent year over year to $7.41 billion from $7.23 billion; established pharmaceuticals revenues rose 1 percent to $4.49 billion from $4.42 billion; and medical devices revenues grew 8 percent to $12.24 billion from $11.37 billion.

Abbott's 2019 R&D expenses increased 6 percent to $2.44 billion from $2.30 billion, while its SG&A expenses rose less than a percent to $9.77 billion from $9.74 billion.

The company reported a 2019 net income of $3.69 billion, or $2.06 per share, compared to $2.37 billion, or $1.33 per share, in 2018. The firm's 2019 adjusted EPS from continuing operations was $3.24 per share, matching the analysts' average consensus estimate.

As for potential mergers and acquisitions, don't expect big news from Abbott. Ford said the company isn't looking to make any deals right now and nothing has crossed the company's radar that would be both strategic and opportunistic.

Abbott said it anticipates adjusted full-year 2020 sales growth of 7 to 8 percent and earnings per share from continuing operations between $2.35 and $2.45. Adjusted EPS from continuing operations for 2020 is expected to be in the range of $3.55 to $3.65.

The firm issued Q1 2020 EPS guidance from continuing operations of $0.40 to $0.42. Adjusted EPS from continuing operations for Q1 2019 is anticipated to be between $0.69 and $0.71.

In early morning trade on the New York Stock Exchange, Abbott shares were up 1 percent at $90.85.