Image Source: Unsplash
 

Abbott Laboratories (ABT - Free Report) reported first-quarter 2023 adjusted earnings of $1.03 per share, which exceeded the Zacks Consensus Estimate by 5.1%. The adjusted figure declined from the prior-year quarter’s levels by 40.5%.

The quarter’s adjustments include 28 cents of certain non-recurring items.
GAAP EPS came in at 75 cents, plunging 45.3% year on year.

First-quarter worldwide sales of $9.74 billion were down 18.1% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 1.1%.

On an organic basis (excluding the impact of foreign exchange), sales rose 10.3% year over year in the reported quarter.
 

Quarter in Detail

Abbott operates through four segments — Established Pharmaceuticals, Medical Devices, Nutrition, and Diagnostics.

In the first quarter, Established Pharmaceuticals sales increased by 3.7% on a reported basis (up 11.1% on an organic basis) to $1.19 billion. Organic sales in key emerging markets improved by 8.3% year over year. According to Abbott, organic sales improvement was backed by growth in Brazil, China and Southeast Asia and across several therapeutic areas, including cardiometabolic, respiratory, and central nervous system/pain management.

The Medical Devices business sales rose 8.5% year over year on a reported basis (up 12.4% on an organic basis) at $3.90 billion. Sales growth was led by double-digit organic growth in Diabetes Care, Structural Heart, Heart Failure, and Neuromodulation. Several recently launched products and new indications contributed to the strong performance, including Amplatzer Amulet, Navitor, TriClip, Aveir, and CardioMEMS.

Diabetes Care reported organic growth of 21% year over year, led by FreeStyle Libre, which contributed $1.2 billion in revenues in the reported quarter. Structural Heart sales rose 16.4% and Heart Failure sales improved 13.6% year over year organically. The Vascular business recorded an organic sales growth of 3.9%% in the quarter under review. Electrophysiology, Rhythm Management, and Neuromodulation recorded organic growth of 8.8%, 4%, and 11.2%, respectively, in the quarter under review.

Nutrition sales rose 3.8% year over year on a reported basis (up 10.3% on an organic basis) to $1.97 billion. Pediatric Nutrition sales registered an 18.4% growth on an organic basis.

Adult Nutrition sales improved by 4.2% organically. Per the company, Adult Nutrition sales benefited from the strong sales performance of Abbott's complete and balanced nutrition brand, Ensure, globally.

Diagnostics sales were down 48.9% year over year on a reported basis (down 47.1% on an organic basis) to $2.69 billion. Core Laboratory Diagnostics sales were up 5.1% organically. Molecular Diagnostics declined 64% on an organic basis. Rapid Diagnostics sales declined 64.5% on an organic basis, whereas Point of Care Diagnostics sales rose 5.7% organically.
 

Margins

Gross profit in the reported quarter fell 21.6% year over year to $5.42 billion. Gross margin contracted 251 basis points (bps) to 55.6%.

Selling, general and administrative expenses were down 0.9% year over year to $2.76 billion. Research and development expenses declined 6.2% year over year to $654 million.
 

Abbott Laboratories Price, Consensus, and EPS Surprise

Abbott Laboratories price-consensus-eps-surprise-chart | Abbott Laboratories Quote

The company reported an adjusted operating profit of $2.00 billion in the quarter under review, down 41.6% year over year. Adjusted operating margin, too, contracted 827 bps to 20.5%.
 

2023 Guidance

Abbott provided its 2023 EPS guidance.

Full-year adjusted earnings (excluding specified items of $1.25 per share) are expected to be in the range of $4.30 to $4.50. The current Zacks Consensus Estimate is pegged at $4.36.

Abbott projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, of at least high-single digits and COVID testing-related sales of around $1.5 billion.
 

Our Take

Abbott exited the first quarter of 2023 with better-than-expected earnings and revenues. However, the figures declined on a year-over-year basis. Total sales in the first quarter were negatively impacted by a year-over-year decline in COVID testing-related sales.

The Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. Medical Device registered strong sales growth in the reported quarter led by double-digit organic growth in Diabetes Care, Structural Heart, Heart Failure, and Neuromodulation.
 

Zacks Rank and Upcoming Releases

Abbott currently carries a Zacks Rank #3 (Hold).

More By This Author: