ABBOTT PARK, Ill., April 18, 2012 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the first quarter ended March 31, 2012.
"Abbott is off to a strong start in 2012, delivering double-digit ongoing earnings-per-share growth," said Miles D. White, chairman and chief executive officer, Abbott. "As a result, we're raising our outlook for the full year. During the quarter, we also announced a number of new product launches and strategic partnerships to enhance the pipelines of each of our major businesses. And, we remain focused on the process of separating Abbott into two leading health care companies, which remains on track to be completed by the end of the year."
The following is a summary of first-quarter 2012 sales by major business category.
% Change vs. 1Q11 |
|||||||||||||||||||
Sales ($ in millions) |
Int'l |
Total |
|||||||||||||||||
U.S. |
Int'l |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
||||||||||||
Total Sales |
3,722 |
5,735 |
9,457 |
5.8 |
5.9 |
3.8 |
5.9 |
4.6 |
|||||||||||
Proprietary Pharmaceuticals |
2,053 |
2,019 |
4,072 |
6.6 |
10.2 |
7.7 |
8.3 |
7.1 |
|||||||||||
Nutritionals |
707 |
859 |
1,566 |
11.0 |
9.9 |
9.3 |
10.4 |
10.1 |
|||||||||||
Established Pharmaceuticals |
-- |
1,257 |
1,257 |
n/a |
1.9 |
(1.6) |
1.9 |
(1.6) |
|||||||||||
Core Laboratory Diagnostics |
174 |
679 |
853 |
12.8 |
4.9 |
3.1 |
6.4 |
4.9 |
|||||||||||
Molecular Diagnostics |
47 |
58 |
105 |
3.1 |
11.4 |
8.4 |
7.6 |
6.0 |
|||||||||||
Point of Care Diagnostics |
64 |
20 |
84 |
16.7 |
28.4 |
28.2 |
19.3 |
19.3 |
|||||||||||
Vascular(a) |
342 |
461 |
803 |
(12.2)a |
2.2 |
1.3 |
(4.4) |
(4.9)a |
|||||||||||
Diabetes Care |
139 |
179 |
318 |
7.3 |
(7.0) |
(8.7) |
(1.4) |
(2.4) |
|||||||||||
Medical Optics |
100 |
172 |
272 |
1.6 |
2.2 |
1.5 |
1.9 |
1.5 |
|||||||||||
Other Sales(b) |
96 |
31 |
127 |
17.7 |
(17.8) |
(18.8) |
6.8 |
6.5 |
|||||||||||
The following is a summary of first-quarter 2012 sales for select products.
% Change vs. 1Q11 |
|||||||||||||||||
Sales ($ in millions) |
Int'l |
Total |
|||||||||||||||
U.S. |
Int'l |
Total |
U.S. |
Operational |
Reported |
Operational |
Reported |
||||||||||
HUMIRA |
773 |
1,161 |
1,934 |
22.7 |
17.4 |
14.2 |
19.4 |
17.4 |
|||||||||
TRILIPIX/TriCor (fenofibrate) |
254 |
75 |
329 |
(12.1) |
(1.8) |
(5.3) |
(10.0) |
(10.7) |
|||||||||
AndroGel |
232 |
9 |
241 |
23.5 |
28.9 |
26.2 |
23.7 |
23.6 |
|||||||||
Kaletra |
55 |
166 |
221 |
(15.0) |
(6.8) |
(9.8) |
(8.9) |
(11.1) |
|||||||||
Lupron |
141 |
58 |
199 |
18.1 |
(8.6) |
(10.5) |
8.7 |
8.0 |
|||||||||
Niaspan |
191 |
-- |
191 |
(15.4) |
n/a |
n/a |
(15.4) |
(15.4) |
|||||||||
Synthroid |
129 |
26 |
155 |
10.5 |
7.1 |
2.4 |
9.9 |
9.1 |
|||||||||
Creon |
68 |
78 |
146 |
5.6 |
17.6 |
14.0 |
11.9 |
10.0 |
|||||||||
Pediatric Nutritionals |
357 |
503 |
860 |
15.4 |
13.0 |
12.8 |
13.9 |
13.8 |
|||||||||
Adult Nutritionals |
347 |
356 |
703 |
7.3 |
6.0 |
4.8 |
6.6 |
6.0 |
|||||||||
Xience Drug-Eluting Stents |
149 |
255 |
404 |
19.3 |
0.7 |
0.5 |
6.9 |
6.7 |
|||||||||
Other Coronary Products(c) |
52 |
103 |
155 |
2.2 |
5.1 |
3.7 |
4.1 |
3.2 |
|||||||||
Endovascular(d) |
62 |
52 |
114 |
5.2 |
5.9 |
4.0 |
5.6 |
4.7 |
|||||||||
Notes: |
1) See "Consolidated Statement of Earnings" for more information. |
|
2) "Operational" growth reflects percentage change over the prior year excluding the impact of exchange rates. |
||
(a) |
Excluding the expected decline of certain royalty and supply arrangement revenues (including Promus), U.S. Vascular sales increased 7.9 percent and worldwide reported Vascular sales increased 3.8 percent. |
|
(b) |
Includes sales primarily from Contract Pharmaceutical Manufacturing and Animal Health. |
|
(c) |
Includes guide wires, balloon catheters and other coronary products. |
|
(d) |
Includes vessel closure, carotid stents and other peripheral products. |
|
n/a = Not applicable |
||
Business Highlights
Released Strong Phase 2 Results from Abbott's Advancing Hepatitis C Program
Released clinical trial results from two interferon-free, Phase 2 studies for the treatment of hepatitis C, PILOT and CO-PILOT. Additional data from the studies will be presented later this week at the annual meeting of the European Association for the Study of the Liver (EASL).
Announced Collaboration for Novel Oral Therapy to Treat Autoimmune Diseases
Announced a global collaboration with Galapagos to develop and commercialize an oral, next-generation JAK1 inhibitor in Phase 2 development with the potential to treat rheumatoid arthritis and other autoimmune diseases.
Received FDA Approval for Absolute Pro Vascular Self-Expanding Stent for Iliac Artery Disease
Announced U.S. Food and Drug Administration (FDA) approval of the Absolute Pro® Vascular Self-Expanding Stent System for the treatment of iliac artery disease, a form of peripheral artery disease that affects the lower extremities.
Received European Approval for HUMIRA in Ulcerative Colitis
Received approval from the European Committee for Medicinal Products for Human Use (CHMP) for HUMIRA® in adults with moderate to severely active ulcerative colitis (UC). HUMIRA is the first and only self-injectable biologic therapy available for UC patients in Europe.
Received CE Mark for PLEX-ID Molecular System and Tests
Received CE Mark in Europe for Abbott's rapid, high-throughput PLEX-ID™ instrument, along with three assays for use on the system. PLEX-ID addresses a significant unmet need for rapid detection and identification of a broad-range of infection-causing microbes.
Announced New Nutrition Manufacturing Facility in the United States
Announced plans to build a nutrition manufacturing facility in Tipp City, Ohio, to produce three of the company's fastest-growing brands, PediaSure®, Ensure® and Glucerna®, for the North American market. The plant is expected to be operational in late 2013.
Received FDA Clearance for New FreeStyle InsuLinx Blood Glucose Monitoring System
Announced FDA clearance for the FreeStyle InsuLinx Blood Glucose Monitoring System, the first from Abbott to include a touch-screen interface, automated logbook and several personalization features designed to improve the diabetes management experience for patients.
Announced Patient Enrollment in Two Phase 3 Studies of HUMIRA for HS
Initiated two Phase 3 clinical trials designed to evaluate the safety and efficacy of an investigational use of HUMIRA in adult patients with moderate to severe hidradenitis suppurativa (HS), a condition for which there are currently no approved treatments.
Presented Data on Key Vascular Devices at ACC 2012
Presented new data on Abbott's leading Vascular pipeline, including study results in patients at high surgical risk treated with the investigational MitraClip® system, and two-year clinical results on the investigational Absorb™ bioresorbable vascular scaffold.
Announced Results from Phase 3 Clinical Trial Evaluating LCIG
Announced positive results from a Phase 3 trial evaluating Abbott's investigational treatment for advanced Parkinson's disease, levodopa-carbidopa intestinal gel (LCIG), which showed significant improvements over levodopa-carbidopa immediate release tablets.
Abbott raises ongoing earnings-per-share outlook for 2012
Abbott is raising its ongoing earnings-per-share guidance for the full-year 2012 to $5.00 to $5.10 from $4.95 to $5.05, reflecting another year of expected strong performance.
Abbott forecasts specified items for the full-year 2012 of approximately $0.52 per share, primarily associated with in-process R&D, acquisition integration and cost-reduction initiatives. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $4.48 to $4.58 for the full-year 2012. This forecast of specified items excludes additional future one-time separation and bond refinancing costs related to the planned separation of Abbott into two companies, which will be quantified at a later date.
Abbott declares 353rd quarterly dividend
On Feb. 17, 2012, the board of directors of Abbott declared the company's quarterly common dividend of 51 cents per share. The cash dividend is payable May 15, 2012, to shareholders of record at the close of business on April 13, 2012. This marks the 353rd consecutive dividend paid by Abbott since 1924. Abbott is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividends for 25 consecutive years.
About Abbott
Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs approximately 91,000 people and markets its products in more than 130 countries.
Abbott's news releases and other information are available on the company's Web site at www.abbott.com. Abbott will webcast its live first-quarter earnings conference call through its Investor Relations Web site at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time.
— Private Securities Litigation Reform Act of 1995 —
A Caution Concerning Forward-Looking Statements
Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995, including the planned separation of the research-based pharmaceutical company from the diversified medical products company and the expected financial results of the two companies after the separation. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors," to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2011, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.
Abbott Laboratories and Subsidiaries Consolidated Statement of Earnings First Quarter Ended March 31, 2012 and 2011 (in millions, except per share data) (unaudited) |
|||||||
2012 |
2011 |
% Change |
|||||
Net Sales |
$ 9,457 |
$ 9,041 |
4.6 |
||||
Cost of products sold |
3,725 |
3,859 |
(3.5) |
||||
Research and development |
1,006 |
930 |
8.1 |
||||
Acquired in-process and collaborations research and development |
150 |
100 |
n/m |
||||
Selling, general and administrative |
3,000 |
2,851 |
5.3 |
||||
Total Operating Cost and Expenses |
7,881 |
7,740 |
1.8 |
||||
Operating earnings |
1,576 |
1,301 |
21.1 |
||||
Net interest expense |
109 |
124 |
(11.7) |
||||
Net foreign exchange (gain) loss |
25 |
(33) |
n/m |
||||
Other (income) expense, net |
(71) |
141 |
n/m |
||||
Earnings before taxes |
1,513 |
1,069 |
41.6 |
||||
Taxes on earnings |
271 |
205 |
32.2 |
||||
Net Earnings |
$ 1,242 |
$ 864 |
43.8 |
||||
Net Earnings Excluding Specified Items, as described below |
$ 1,648 |
$ 1,419 |
16.2 |
1) |
|||
Diluted Earnings per Common Share |
$ 0.78 |
$ 0.55 |
41.8 |
||||
Diluted Earnings Per Common Share, Excluding Specified Items, |
|||||||
as described below |
$ 1.03 |
$ 0.91 |
13.2 |
1) |
|||
Average Number of Common Shares Outstanding Plus Dilutive |
|||||||
Common Stock Options and Awards |
1,590 |
1,559 |
|||||
1) |
2012 Net Earnings Excluding Specified Items excludes after-tax charges of $150 million, or $0.09 per share, for acquired in-process research and development related to the Galapagos collaboration, $50 million, or $0.03 per share, for a milestone payment related to the Reata collaboration, $107 million, or $0.07 per share, for litigation reserves, $34 million, or $0.02 per share, for separation costs, and $65 million, or $0.04 per share, for restructuring and integration charges. |
|
2011 Net Earnings Excluding Specified Items excludes after-tax charges of $81 million, or $0.05 per share, associated with the acquisition of Solvay Pharmaceuticals, $103 million, or $0.07 per share, for restructuring in the pharmaceutical business, $58 million, or $0.04 per share, for other cost reduction initiatives and other, $137 million, or $0.09 per share, for the 2009 and 2010 impact of the change to a calendar year end for international operations, $100 million, or $0.06 per share, relating to acquired in-process research and development related to the Reata collaboration, and $76 million, or $0.05 per share, for litigation reserves. |
||
NOTE: See attached questions and answers section for further explanation of Consolidated Statement of Earnings line items. |
||
n/m = Percent change is not meaningful. |
||
Questions & Answers
Q1) What drove sales growth in the quarter?
A1) Excluding foreign exchange, worldwide sales increased nearly 6 percent. Reported sales increased 4.6 percent, including an unfavorable 1.3 percent effect of foreign exchange. In emerging markets, sales increased more than 10 percent, excluding the negative impact of foreign exchange, with strong double-digit growth in the key emerging markets across the businesses.
Worldwide Nutritionals sales increased 10.4 percent in the quarter, excluding an unfavorable 0.3 percent effect of foreign exchange. U.S. Nutritionals increased 11.0 percent, with U.S. Pediatric Nutritionals sales growth of 15.4 percent on continued share gains of our infant formula, Similac®, and continued double-digit growth of PediaSure. U.S. Adult Nutritionals grew 7.3 percent, driven by double-digit growth of Ensure and Glucerna. In April, we initiated construction of a new manufacturing facility in Ohio to support the growth of these brands. International Nutritionals increased 9.9 percent, excluding an unfavorable 0.6 percent effect of foreign exchange, driven by continued strong growth of Pediatric Nutritionals in emerging markets.
Global sales of Core Laboratory Diagnostics increased 6.4 percent, excluding an unfavorable 1.5 percent effect of foreign exchange, driven by 12.8 percent growth in the U.S. due to continued uptake of PRISM, and 4.9 percent international growth, excluding an unfavorable 1.8 percent effect of foreign exchange. Molecular Diagnostics and Point of Care Diagnostics also drove global Diagnostics sales growth in the quarter.
Worldwide Vascular sales increased nearly 4 percent, excluding certain royalty and supply arrangement revenues, with strong growth of our XIENCE drug-eluting stent. Endovascular and Other Coronary Products also contributed to Vascular growth. Abbott received approval for XIENCE PRIME™ in Japan in April, which we expect to drive continued share gains over the course of the year. On a reported basis, including the expected reduction in certain royalty and supply arrangement revenues (including Promus), worldwide Vascular sales declined 4.9 percent.
Worldwide Proprietary Pharmaceuticals sales increased 8.3 percent, excluding an unfavorable 1.2 percent effect of foreign exchange, driven by strong growth across a number of key franchises including HUMIRA, AndroGel®, Creon®, Lupron® and Synthroid®.
Q2) What is the update on Abbott's planned separation into two leading health care companies?
A2) In October 2011, Abbott announced plans to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The diversified medical products company will consist of Abbott's branded generic pharmaceuticals, devices, diagnostics and nutritionals businesses, and will retain the Abbott name. In March 2012, the research-based pharmaceutical company, which will include Abbott's current portfolio of proprietary pharmaceuticals and biologics, was named AbbVie.
The transaction is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new pharmaceutical company. The expected stock distribution ratio will be determined at a future date. It is expected that the two companies will each pay a dividend that, when combined, will equal the current Abbott dividend at the time of separation.
We continue to expect the separation to be completed by the end of this year.
Q3) What was the gross margin ratio in the quarter?
A3) The gross margin ratio before and after specified items is shown below (dollars in millions):
1Q12 |
||||
Cost of Products Sold |
Gross Margin |
Gross Margin % |
||
As reported (GAAP) |
$3,725 |
$5,732 |
60.6% |
|
Adjusted for specified items: |
||||
Restructuring/integration/other |
($46) |
$46 |
0.5% |
|
As adjusted |
$3,679 |
$5,778 |
61.1% |
|
The adjusted gross margin ratio was 61.1 percent in the first quarter, an increase of 260 basis points from the prior year quarter, driven by improved efficiencies across a number of operating divisions and favorable product mix.
Q4) What drove ongoing SG&A and R&D investment?
A4) Both ongoing SG&A and R&D investment reflect Abbott's continued investment in programs to drive future growth. Ongoing R&D expense as a percentage of sales was 10.0 percent, reflecting continued investment in Abbott's pipeline, including programs in vascular devices, diagnostics, nutritionals, immunology, neuroscience, oncology and HCV.
Q5) What was the tax rate?
A5) The ongoing tax rate this quarter was 15.0 percent, in line with expectations.
1Q12 |
||||
Pre-Tax |
Taxes on |
Tax |
||
Income |
Earnings |
Rate |
||
As reported |
$1,513 |
$271 |
17.9% |
|
Specified items |
$426 |
$20 |
4.7% |
|
Excluding specified items |
$1,939 |
$291 |
15.0% |
|
Q6) How did specified items affect reported results?
A6) Specified items impacted first-quarter results as follows:
1Q12 |
||||
(dollars in millions, except earnings-per-share) |
Earnings |
|||
Pre- tax |
After- tax |
EPS |
||
As reported (GAAP) |
$1,513 |
$1,242 |
$0.78 |
|
Adjusted for specified items: |
||||
Acquired IPR&D/R&D milestone |
$200 |
$200 |
$0.12 |
|
Litigation reserves |
$108 |
$107 |
$0.07 |
|
Restructuring/integration/other |
$76 |
$65 |
$0.04 |
|
Separation costs |
$42 |
$34 |
$0.02 |
|
As adjusted |
$1,939 |
$1,648 |
$1.03 |
|
Acquired in-process research and development (IPR&D) is related to the agreement with Galapagos to develop and commercialize an oral, next-generation JAK1 inhibitor. The R&D milestone payment is related to the Reata Pharmaceuticals collaboration. Litigation reserves is associated with previously disclosed litigation. Restructuring/integration/other is associated with previously announced restructuring actions and acquisition-related integration costs. Separation costs are expenses related to the planned separation of Abbott into two companies.
The impact of specified items by Consolidated Statement of Earnings line item is as follows (dollars in millions):
1Q12 |
||||||
Cost of Products Sold |
R&D |
Acquired in-process R&D |
SG&A |
Other (Income)/ Expense |
||
As reported (GAAP) |
$3,725 |
$1,006 |
$150 |
$3,000 |
($71) |
|
Adjusted for specified items: |
||||||
Acquired IPR&D/R&D milestone |
-- |
($50) |
($150) |
-- |
-- |
|
Litigation reserves |
-- |
-- |
-- |
($108) |
-- |
|
Restructuring/integration/other |
($46) |
($11) |
-- |
($15) |
($4) |
|
Separation costs |
-- |
-- |
-- |
($42) |
-- |
|
As adjusted |
$3,679 |
$945 |
-- |
$2,835 |
($75) |
|
Q7) What are the key areas of focus in Abbott's pipeline?
A7) In the first quarter of 2012, we made significant progress in advancing both our pharmaceutical pipeline, which currently includes more than 20 compounds or new indications in Phase 2 or Phase 3 development, as well as our diversified medical products pipeline. Following are highlights:
SOURCE Abbott