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Abbott Laboratories Reports Strong Fourth-Quarter Sales

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Abbott Laboratories’ stock fell 2% in premarket trading on Wednesday following the company’s impressive fourth-quarter sales report. Despite a significant decline in COVID-test sales, the healthcare-products company saw robust growth in its medical-device and nutrition segments.

Financial Performance

In the fourth quarter, Abbott Laboratories reported a net income of $1.59 billion, or 91 cents per share, compared to $1.03 billion, or 59 cents per share, in the same period last year. Adjusted per-share earnings met the FactSet consensus at $1.19. The company’s sales for the quarter reached $10.241 billion, surpassing the FactSet consensus of $10.186 billion, representing a 1.5% increase from the previous year.

Strong Medical-Device and Nutrition Sales

Analysts have been relying on increased medical-procedure volumes to boost Abbott’s medical-device business, which includes pacemakers, stent systems, and other products. In the fourth quarter, the company reported a 17.5% growth in medical-device sales compared to the same period last year. Additionally, sales of Abbott’s FreeStyle Libre continuous glucose monitors experienced a significant jump of 25.5%.

Transitioning Away from COVID Testing

After facing declining revenue from its COVID-testing business, Abbott is now shifting its focus to core segments and strategic products like continuous glucose monitors. In the fourth quarter, COVID testing-related sales dropped to $288 million from $1.07 billion in the previous year.

Future Growth Potential

Abbott has set an ambitious goal of doubling its annual FreeStyle Libre sales to $10 billion by 2028. Currently used by over 5 million people worldwide, there is a vast market with over 500 million individuals globally who have diabetes. Abbott CEO Robert Ford highlighted this potential for growth at the J.P. Morgan healthcare conference in San Francisco earlier this month.

Abbott’s Growth Strategy

Abbott, a leading healthcare company, is implementing various strategies to drive growth in the segment. One of the key advances includes the integration of the FreeStyle Libre 2 Plus sensor with Tandem Diabetes Care Inc.’s insulin pump. This integration allows individuals with diabetes to predict and prevent abnormal blood-sugar levels effectively.

Despite the impact of anti-obesity medications on the shares of diabetes device makers, Abbott believes it may benefit from this trend. Last year, the company released data demonstrating a significant increase in the number of people using FreeStyle Libre while taking GLP-1 drugs. Moreover, adherence to the sensor was found to be higher among individuals taking these medications.

In addition to its focus on diabetes device makers, Abbott is also directing its attention to the GLP-1 market in its nutrition business. The nutrition business of Abbott, known for its popular nutritional supplement drink Ensure and other products, aims to address the unwanted muscle loss associated with GLP-1s. By pursuing advances that could counter or mitigate these side effects, Abbott strives to provide holistic care to individuals taking GLP-1 drugs.

Looking ahead, Abbott projects adjusted earnings per share between $4.50 and $4.70 for the full year 2024. The company also anticipates organic sales growth, excluding COVID testing, in the range of 8% to 10%.

Over the past 12 months, Abbott shares have gained 1.3%, while the S&P 500 has recorded a remarkable 21% increase.

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