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Abbott Reports 2 Percent Dx Growth Amid Flat Overall Q1 Revenues

NEW YORK (GenomeWeb) ­– Abbott reported Wednesday morning that first quarter sales in its Diagnostics business grew 2 percent year over year, buoying flat overall revenue growth for the company.

For the three months ended March 31, Abbott reported overall Q1 revenues of $4.89 billion, down a fraction of a percent from Q1 last year, but up 5 percent year over year excluding unfavorable foreign currency effects. The company beat the consensus Wall Street estimate of $4.78 billion.

Abbott reported Diagnostics sales of $1.12 billion, up 2 percent on a reported basis and 7 percent excluding foreign currency effects.

Within Diagnostics, on a reported basis core laboratory Q1 sales grew 2 percent, molecular revenues fell 3 percent, and point of care grew about 9 percent year over year. Abbott noted that molecular diagnostics grew 1 percent excluding foreign currency effects, and strong operational sales in infectious disease testing offset the expected scale-down of its genetics business.

On a conference call to review Q1 financial results, Abbott CEO Miles White said that diagnostics growth was "driven by continued above-market performance in core laboratory and point-of-care diagnostics. We continue to capture share and win new accounts with our customer-focused solutions, which [we'll further enhance] with an unprecedented series of new instrument launches over the next few years."

White also noted that the company "continue[s] to make great progress on our next-generation diagnostic systems in point of care, immunoassay testing, clinical chemistry, hematology, and blood screening. These new systems are being designed with the customer in mind, incorporating the features they deem most important, including increased automation, higher throughput, and an enhanced user interface." White added that the company will provide more details on launch plans for these systems in coming quarters.

In April, for instance, Abbott announced that it is developing a next-generation molecular diagnostics platform and test menu for high-volume clinical laboratory testing. The platform will eventually replace the firm's current m2000 MDx system.

In other businesses, Nutrition sales grew a fraction of a percent, Established Pharmaceuticals dropped 1 percent, and Medical Devices fell more than 2 percent in the first quarter.

Abbott reported net earnings of $316 million, or $0.21 per share, in Q1 compared to $2.29 billion, or $1.51 per share, in the year-ago period. Excluding special items, EPS was $0.41, exceeding the company's previous guidance range of $0.38 to $0.40, and besting analysts' consensus estimate of $0.39. Abbott noted that 2015 Q1 earnings reflect the after-tax gain of $1.74 billion on the sale of its developed markets branded generics pharmaceuticals and animal health businesses to Mylan and Zoetis in February 2015; the first-quarter financial results from these businesses up to the date of sale; and a favorable adjustment to tax expense as a result of the resolution of various tax positions from previous years related to AbbVie operations.

The firm spent $379 million on R&D in Q1, up 21 percent from $313 million in Q1 2015, and logged $1.70 billion in SG&A expenses, down 2 percent year over year from $1.74 billion.

Abbott raised its full-year 2016 adjusted EPS guidance range for continuing operations to $2.14 to $2.24 from $2.10 to $2.20. On a reported basis, full-year 2016 EPS is expected to be between $1.36 and $1.46.

In February, Abbott said that it had entered into a definitive agreement to acquire clinical diagnostics firm Alere for $5.8 billion.

During today's conference call, in response to an analyst question about growth opportunities for Alere compared to Abbott's existing diagnostics business, White said that he views Abbott's diagnostics business "broadly, in all phases, all segments, and … globally, and by testing categories, not just point of care, or core lab, blood screening, molecular testing, and so forth."

"I think our diagnostics business has shown that there is good growth to be had, and good growth if you're innovative, and your systems and products are responsive to customer needs," White added. "I would comment on the overall diagnostics growth opportunity as demonstrated by Abbott's diagnostics business, and not specific to any one company."

In addition, an analyst asked White if he was reaffirming the company's commitment to the Alere transaction. White noted that it was "not appropriate" to comment at this time, as Alere has been delayed in filing its 10K, and that "we don't know when they're going to file their proxy, [and] don't know when they'll have a shareholder vote."

In Wednesday morning trade on the New York Stock Exchange, shares of Abbott were down a fraction of 1 percent at $43.61. Shares of Alere, meanwhile, fell around 14 percent to $42.65, following White's comments on the call.