Abbott Reports Second-Quarter 2023 Results; Increases Outlook For Underlying Base Business
–Sales of $10.0 billion driven by strong underlying base business performance
–Reported sales decreased 11.4 percent due to anticipated decline in COVID-19 testing-related sales versus prior year
–Organic sales growth for underlying base business of 11.5 percent, led by Medical Devices, Established Pharmaceuticals and Nutrition
–Continues to strengthen portfolio with new product approvals and expanded reimbursement coverage
ABBOTT PARK, Ill., July 20, 2023 — Abbott today announced financial results for the second quarter ended June 30, 2023.
•Second-quarter GAAP diluted EPS of $0.78 and adjusted diluted EPS of $1.08, which excludes specified items.
•Projected full-year 2023 diluted EPS on a GAAP basis of $3.02 to $3.22.
•Projected full-year adjusted EPS of $4.30 to $4.50 remains unchanged but reflects an increased outlook for the underlying base business offset by a lower forecasted earnings contribution from COVID-19 testing-related sales.
•Abbott now projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales1, to be in the low double-digits2 and COVID-19 testing-related sales of approximately $1.3 billion.
•In May, Abbott received U.S. Food and Drug Administration (FDA) approval of its TactiFlex® Ablation Catheter, Sensor Enabled™, the world's first ablation catheter with a unique flexible electrode tip and contact force sensing technology to treat patients with atrial fibrillation (AFib).
•In June, Abbott announced its FreeStyle Libre® 2 system is the first and only continuous glucose monitoring (CGM) system to receive expanded national reimbursement in France to now include all people with diabetes who use insulin.
•In June, Abbott received U.S. FDA approval of its AVEIR™ dual chamber (DR) leadless pacemaker system, the world's first dual chamber leadless pacing system that treats people with abnormal heart rhythms.
"We're achieving strong growth in our underlying base business," said Robert B. Ford, chairman and chief executive officer, Abbott. "We expect our highly productive pipeline to sustain the momentum we're building this year and position us well for growth in the future."
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SECOND-QUARTER BUSINESS OVERVIEW
Management believes that measuring sales growth rates on an organic basis, which excludes the impact of foreign exchange, the impact of exiting the pediatric nutrition business in China, and the impact of the acquisition of Cardiovascular Systems, Inc. (CSI) is an appropriate way for investors to best understand the core underlying performance of the business. Management further believes that measuring sales growth rates on an organic basis excluding COVID-19 tests is an appropriate way for investors to best understand underlying base business performance as the COVID-19 pandemic has shifted to an endemic state, resulting in significantly lower demand for COVID-19 tests.
Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.
Second Quarter 2023 Results (2Q23)
Sales 2Q23 ($ in millions)
Total Company
Nutrition
Diagnostics
Established Pharmaceuticals
Medical Devices
U.S.
3,758
881
961
—
1,913
International
6,220
1,195
1,356
1,287
2,382
Total reported
9,978
2,076
2,317
1,287
4,295
% Change vs. 2Q22
U.S.
(23.2)
15.7
(60.7)
n/a
13.3
International
(2.3)
0.3
(26.8)
5.2
13.6
Total reported
(11.4)
6.3
(46.0)
5.2
13.5
Impact of foreign exchange
(2.5)
(3.0)
(1.3)
(7.4)
(1.9)
Impact of CSI acquisition
0.4
—
—
—
1.2
Impact of business exit
(0.1)
(0.6)
—
—
—
Organic
(9.2)
9.9
(44.7)
12.6
14.2
Impact of COVID-19 testing sales (3)
(20.7)
—
(51.8)
—
—
Organic (excluding COVID-19 tests)
11.5
9.9
7.1
12.6
14.2
U.S.
10.9
15.7
5.2
n/a
11.0
International
11.9
6.1
8.2
12.6
16.8
First Half 2023 Results (1H23)
Sales 1H23 ($ in millions)
Total Company
Nutrition
Diagnostics
Established Pharmaceuticals
Medical Devices
U.S.
7,686
1,693
2,296
—
3,691
International
12,039
2,350
2,709
2,476
4,504
Total reported
19,725
4,043
5,005
2,476
8,195
% Change vs. 1H22
U.S.
(21.8)
17.7
(55.4)
n/a
14.2
International
(9.6)
(2.4)
(38.4)
4.4
8.6
Total reported
(14.8)
5.1
(47.6)
4.4
11.0
Impact of foreign exchange
(2.9)
(3.4)
(1.6)
(7.5)
(2.9)
Impact of CSI acquisition
0.2
—
—
—
0.6
Impact of business exit
(0.2)
(1.6)
—
—
—
Organic
(11.9)
10.1
(46.0)
11.9
13.3
Impact of COVID-19 testing sales (3)
(22.6)
—
(51.7)
—
—
Organic (excluding COVID-19 tests)
10.7
10.1
5.7
11.9
13.3
U.S.
11.7
17.7
2.7
n/a
12.9
International
10.2
5.4
7.5
11.9
13.7
Refer to page 16 for a reconciliation of adjusted historical revenue to reported revenue.
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Page 2 of 20
Nutrition
Second Quarter 2023 Results (2Q23)
Sales 2Q23 ($ in millions)
Total
Pediatric
Adult
U.S.
881
507
374
International
1,195
517
678
Total reported
2,076
1,024
1,052
% Change vs. 2Q22
U.S.
15.7
22.5
7.6
International
0.3
1.1
(0.2)
Total reported
6.3
10.6
2.5
Impact of foreign exchange
(3.0)
(2.3)
(3.5)
Impact of business exit
(0.6)
(1.6)
—
Organic
9.9
14.5
6.0
U.S.
15.7
22.5
7.6
International
6.1
7.5
5.2
Worldwide Nutrition sales increased 6.3 percent on a reported basis and 9.9 percent on an organic basis in the second quarter. Refer to page 16 for a reconciliation of adjusted historical revenue to reported revenue.
In Pediatric Nutrition, global sales increased 10.6 percent on a reported basis and 14.5 percent on an organic basis. In the U.S., sales growth of 22.5 percent was primarily driven by continued market share recovery in the infant formula business following a voluntary recall of certain products last year.
In Adult Nutrition, global sales increased 2.5 percent on a reported basis and 6.0 percent on an organic basis, which was led by strong global growth of Ensure®, Abbott's market-leading complete and balanced nutrition brand.
First Half 2023 Results (1H23)
Sales 1H23 ($ in millions)
Total
Pediatric
Adult
U.S.
1,693
966
727
International
2,350
982
1,368
Total reported
4,043
1,948
2,095
% Change vs. 1H22
U.S.
17.7
28.6
5.8
International
(2.4)
(3.8)
(1.4)
Total reported
5.1
9.9
1.0
Impact of foreign exchange
(3.4)
(2.6)
(4.1)
Impact of business exit
(1.6)
(3.8)
—
Organic
10.1
16.3
5.1
U.S.
17.7
28.6
5.8
International
5.4
6.4
4.8
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Diagnostics
Second Quarter 2023 Results (2Q23)
Sales 2Q23 ($ in millions)
Total
Core Laboratory
Molecular
Point of Care
Rapid Diagnostics *
U.S.
961
311
43
99
508
International
1,356
982
98
43
233
Total reported
2,317
1,293
141
142
741
% Change vs. 2Q22
U.S.
(60.7)
8.6
(40.1)
(2.3)
(74.4)
International
(26.8)
5.1
(29.9)
13.1
(68.5)
Total reported
(46.0)
5.9
(33.3)
1.9
(72.8)
Impact of foreign exchange
(1.3)
(3.6)
(1.2)
(0.5)
(0.5)
Organic
(44.7)
9.5
(32.1)
2.4
(72.3)
Impact of COVID-19 testing sales (3)
(51.8)
(0.6)
(30.8)
—
(75.6)
Organic (excluding COVID-19 tests)
7.1
10.1
(1.3)
2.4
3.3
U.S.
5.2
9.4
3.4
(2.3)
4.0
International
8.2
10.4
(3.1)
15.2
2.3
As expected, Diagnostics sales growth in the second quarter was negatively impacted by year-over-year declines in COVID-19 testing-related sales3. Worldwide COVID-19 testing sales were $263 million in the second quarter of 2023 compared to $2.324 billion in the second quarter of the prior year.
Excluding COVID-19 testing-related sales, global Diagnostics sales increased 4.3 percent on a reported basis and 7.1 percent on an organic basis.
First Half 2023 Results (1H23)
Sales 1H23 ($ in millions)
Total
Core Laboratory
Molecular
Point of Care
Rapid Diagnostics *
U.S.
2,296
600
90
192
1,414
International
2,709
1,875
198
84
552
Total reported
5,005
2,475
288
276
1,966
% Change vs. 1H22
U.S.
(55.4)
8.2
(63.2)
0.1
(66.0)
International
(38.4)
1.3
(48.9)
11.2
(73.5)
Total reported
(47.6)
2.9
(54.4)
3.2
(68.5)
Impact of foreign exchange
(1.6)
(4.4)
(1.1)
(0.8)
(0.6)
Organic
(46.0)
7.3
(53.3)
4.0
(67.9)
Impact of COVID-19 testing sales (3)
(51.7)
(1.3)
(38.8)
—
(73.6)
Organic (excluding COVID-19 tests)
5.7
8.6
(14.5)
4.0
5.7
U.S.
2.7
9.2
(21.0)
0.1
1.5
International
7.5
8.5
(11.6)
14.0
12.3
*The Acelis Connected Health business was internally transferred from Rapid Diagnostics to Heart Failure on January 1, 2023. As a result, $28 million of sales in the second quarter of 2022 and $57 million in the first half 2022 were moved from Rapid Diagnostics to Heart Failure.
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Established Pharmaceuticals
Second Quarter 2023 Results (2Q23)
Sales 2Q23 ($ in millions)
Total
Key Emerging Markets
Other
U.S.
—
—
—
International
1,287
990
297
Total reported
1,287
990
297
% Change vs. 2Q22
U.S.
n/a
n/a
n/a
International
5.2
4.6
7.1
Total reported
5.2
4.6
7.1
Impact of foreign exchange
(7.4)
(8.4)
(4.4)
Organic
12.6
13.0
11.5
U.S.
n/a
n/a
n/a
International
12.6
13.0
11.5
Established Pharmaceuticals sales increased 5.2 percent on a reported basis and 12.6 percent on an organic basis in the second quarter.
Key Emerging Markets include several emerging countries that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these geographies increased 4.6 percent on a reported basis and 13.0 percent on an organic basis, led by growth in several geographies and therapeutic areas, including gastroenterology, women's health, and central nervous system/pain management.
First Half 2023 Results (1H23)
Sales 1H23 ($ in millions)
Total
Key Emerging Markets
Other
U.S.
—
—
—
International
2,476
1,902
574
Total reported
2,476
1,902
574
% Change vs. 1H22
U.S.
n/a
n/a
n/a
International
4.4
2.7
10.8
Total reported
4.4
2.7
10.8
Impact of foreign exchange
(7.5)
(8.0)
(5.5)
Organic
11.9
10.7
16.3
U.S.
n/a
n/a
n/a
International
11.9
10.7
16.3
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Medical Devices
Second Quarter 2023 Results (2Q23)
Sales 2Q23 ($ in millions)
Total
Rhythm Management
Electro- physiology
Heart Failure *
Vascular
Structural Heart
Neuro-modulation
Diabetes Care
U.S.
1,913
269
245
226
264
219
185
505
International
2,382
314
308
69
451
279
42
919
Total reported
4,295
583
553
295
715
498
227
1,424
% Change vs. 2Q22
U.S.
13.3
2.0
8.8
8.9
15.4
5.9
17.6
26.6
International
13.6
10.3
18.7
11.9
6.1
19.8
5.1
15.8
Total reported
13.5
6.3
14.1
9.6
9.3
13.3
15.1
19.4
Impact of foreign exchange
(1.9)
(1.9)
(2.8)
(0.3)
(2.3)
(1.5)
(1.1)
(2.0)
Impact of CSI acquisition
1.2
—
—
—
6.6
—
—
—
Organic
14.2
8.2
16.9
9.9
5.0
14.8
16.2
21.4
U.S.
11.0
2.0
8.8
8.9
(1.9)
5.9
17.6
26.6
International
16.8
14.0
23.9
13.2
8.7
22.6
10.5
18.8
Worldwide Medical Devices sales increased 13.5 percent on a reported basis and 14.2 percent on an organic basis in the second quarter. Sales growth was led by double-digit organic growth in Diabetes Care, Electrophysiology, Structural Heart and Neuromodulation. Several recently launched products and new indications contributed to the strong performance, including Amplatzer® Amulet®, Navitor®, TriClip®, and Aveir™.
In Electrophysiology, internationally, sales grew high-teens on a reported basis and more than 20 percent on an organic basis, which includes high-teens growth in Europe.
In Diabetes Care, Freestyle Libre sales were $1.3 billion, which represents sales growth of 22.9 percent on a reported basis and 24.7 percent on an organic basis.
First Half 2023 Results (1H23)
Sales 1H23 ($ in millions)
Total
Rhythm Management
Electro- physiology
Heart Failure *
Vascular
Structural Heart
Neuro-modulation
Diabetes Care
U.S.
3,691
529
483
444
482
429
340
984
International
4,504
581
575
132
850
530
83
1,753
Total reported
8,195
1,110
1,058
576
1,332
959
423
2,737
% Change vs. 1H22
U.S.
14.2
3.2
9.4
10.0
10.3
8.1
13.2
32.7
International
8.6
3.6
8.7
14.1
1.8
16.8
9.1
11.2
Total reported
11.0
3.4
9.0
10.9
4.7
12.8
12.4
18.1
Impact of foreign exchange
(2.9)
(2.8)
(3.8)
(0.8)
(3.1)
(2.7)
(1.4)
(3.1)
Impact of CSI acquisition
0.6
—
—
—
3.4
—
—
—
Organic
13.3
6.2
12.8
11.7
4.4
15.5
13.8
21.2
U.S.
12.9
3.2
9.4
10.0
1.3
8.1
13.2
32.7
International
13.7
8.9
15.7
17.4
6.1
22.0
16.1
15.8
*The Acelis Connected Health business was internally transferred from Rapid Diagnostics to Heart Failure on January 1, 2023. As a result, $28 million of sales in the second quarter of 2022 and $57 million in the first half of 2022 were moved from Rapid Diagnostics to Heart Failure.
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ABBOTT'S EARNINGS-PER-SHARE GUIDANCE
Abbott projects full-year 2023 diluted earnings per share under GAAP of $3.02 to $3.22. Abbott forecasts specified items for the full-year 2023 of $1.28 per share primarily related to intangible amortization, costs associated with acquisitions, restructuring and cost reduction initiatives and other net expenses. Excluding specified items, projected adjusted diluted earnings per share would be $4.30 to $4.50 for the full-year 2023.
On June 9, 2023, the board of directors of Abbott declared the company's quarterly dividend of $0.51 per share. Abbott's cash dividend is payable August 15, 2023, to shareholders of record at the close of business on July 14, 2023.
Abbott has increased its dividend payout for 51 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.
About Abbott:
Abbott is a global healthcare leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritionals and branded generic medicines. Our 115,000 colleagues serve people in more than 160 countries.
Connect with us at www.abbott.com, on LinkedIn at www.linkedin.com/company/abbott-/, on Facebook at www.facebook.com/Abbott and on Twitter @AbbottNews.
Abbott will live-webcast its second-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8:30 a.m. Central time today. An archived edition of the webcast will be available later in the day.
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— 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. 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" in our Annual Report on Form 10-K for the year ended Dec. 31, 2022, and are incorporated herein by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.
Abbott Financial:
Michael Comilla, 224-668-1872
Ryan Aliff, 224-667-2299
Abbott Media:
Karen Twigg May, 224-668-2681
Kate Dyer, 224-668-9965
1For the full-year 2022, COVID-19 testing-related sales were $8.368 billion and total worldwide sales were $43.653 billion.
2Abbott has not provided the related GAAP financial measure for organic sales growth, excluding COVID-19 testing-related sales, on a forward-looking basis because the company is unable to predict the impact of foreign exchange due to the unpredictability of future changes in foreign exchange rates, which could significantly impact reported sales growth.
3Diagnostic sales and COVID-19 testing-related sales in 2023 and 2022 are summarized below:
Sales 2Q23
COVID Tests Sales 2Q23
($ in millions)
U.S.
Int'l
Total
U.S.
Int'l
Total
Total Diagnostics
961
1,356
2,317
216
47
263
Core Laboratory
311
982
1,293
2
3
5
Molecular
43
98
141
4
4
8
Rapid Diagnostics
508
233
741
210
40
250
Sales 2Q22
COVID Tests Sales 2Q22
($ in millions)
U.S.
Int'l
Total
U.S.
Int'l
Total
Total Diagnostics
2,441
1,853
4,294
1,732
592
2,324
Core Laboratory
287
934
1,221
3
9
12
Molecular
71
141
212
34
41
75
Rapid Diagnostics
1,982
740
2,722
1,695
542
2,237
Sales 1H23
COVID Tests Sales 1H23
($ in millions)
U.S.
Int'l
Total
U.S.
Int'l
Total
Total Diagnostics
2,296
2,709
5,005
824
169
993
Core Laboratory
600
1,875
2,475
4
7
11
Molecular
90
198
288
14
14
28
Rapid Diagnostics
1,414
552
1,966
806
148
954
Sales 1H22
COVID Tests Sales 1H22
($ in millions)
U.S.
Int'l
Total
U.S.
Int'l
Total
Total Diagnostics
5,153
4,398
9,551
3,720
1,908
5,628
Core Laboratory
555
1,850
2,405
8
32
40
Molecular
243
389
632
148
173
321
Rapid Diagnostics
4,163
2,084
6,247
3,564
1,703
5,267
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Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Second Quarter Ended June 30, 2023 and 2022
(in millions, except per share data)
(unaudited)
2Q23
2Q22
% Change
Net Sales
$9,978
$11,257
(11.4)
Cost of products sold, excluding amortization expense
4,483
4,933
(9.1)
Amortization of intangible assets
498
507
(1.7)
Research and development
715
684
4.5
Selling, general, and administrative
2,740
2,757
(0.6)
Total Operating Cost and Expenses
8,436
8,881
(5.0)
Operating Earnings
1,542
2,376
(35.1)
Interest expense, net
61
106
(41.7)
Net foreign exchange (gain) loss
21
—
n/m
Other (income) expense, net
(176)
(82)
115.9
Earnings before taxes
1,636
2,352
(30.4)
Taxes on earnings
261
334
(22.0)
1)
Net Earnings
$1,375
$2,018
(31.8)
Net Earnings excluding Specified Items, as described below
$1,893
$2,542
(25.5)
2)
Diluted Earnings per Common Share
$0.78
$1.14
(31.6)
Diluted Earnings per Common Share,
excluding Specified Items, as described below
$1.08
$1.43
(24.5)
2)
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options
1,750
1,765
NOTES:
See tables on page 13 for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
See footnotes on the following page.
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1)2023 Taxes on Earnings includes the recognition of approximately $40 million of net tax expense as a result of the resolution of various tax positions related to prior years.
2)2023 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $518 million, or $0.30 per share, for intangible amortization, charges related to restructuring and cost reduction initiatives, expenses associated with acquisitions and other net expenses.
2022 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $524 million, or $0.29 per share, for intangible amortization, charges related to a voluntary recall and other net expenses primarily associated with acquisitions.
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Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
First Half Ended June 30, 2023 and 2022
(in millions, except per share data)
(unaudited)
1H23
1H22
% Change
Net Sales
$19,725
$23,152
(14.8)
Cost of products sold, excluding amortization expense
8,814
9,920
(11.2)
Amortization of intangible assets
989
1,019
(2.9)
Research and development
1,369
1,381
(0.9)
Selling, general, and administrative
5,502
5,544
(0.8)
Total Operating Cost and Expenses
16,674
17,864
(6.7)
Operating Earnings
3,051
5,288
(42.3)
Interest expense, net
113
223
(49.2)
Net foreign exchange (gain) loss
27
(3)
n/m
Other (income) expense, net
(287)
(160)
79.3
Earnings before taxes
3,198
5,228
(38.8)
Taxes on earnings
505
763
(33.8)
1)
Net Earnings
$2,693
$4,465
(39.7)
Net Earnings excluding Specified Items, as described below
$3,708
$5,619
(34.0)
2)
Diluted Earnings per Common Share
$1.53
$2.51
(39.0)
Diluted Earnings per Common Share,
excluding Specified Items, as described below
$2.11
$3.16
(33.2)
2)
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options
1,751
1,770
NOTES:
See tables on page 14 for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
See footnotes on the following page.
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Page 11 of 20
1)2023 Taxes on Earnings includes the recognition of approximately $62 million of net tax expense as a result of the resolution of various tax positions related to prior years.
2022 Taxes on Earnings includes the recognition of approximately $27 million of net tax expense as a result of the resolution of various tax positions related to prior years and approximately $32 million in excess tax benefits associated with share-based compensation.
2)2023 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $1.015 billion, or $0.58 per share, for intangible amortization, charges related to restructuring and cost reduction initiatives, expenses associated with acquisitions and other net expenses.
2022 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $1.154 billion, or $0.65 per share, for intangible amortization, charges related to a voluntary recall and other net expenses primarily associated with acquisitions.
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Page 12 of 20
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information
Second Quarter Ended June 30, 2023 and 2022
(in millions, except per share data)
(unaudited)
2Q23
As Reported (GAAP)
Specified Items
As Adjusted
Intangible Amortization
$
498
$
(498)
$
—
Gross Margin
4,997
529
5,526
R&D
715
(72)
643
SG&A
2,740
(22)
2,718
Other (income) expense, net
(176)
57
(119)
Earnings before taxes
1,636
566
2,202
Taxes on Earnings
261
48
309
Net Earnings
1,375
518
1,893
Diluted Earnings per Share
$
0.78
$
0.30
$
1.08
Specified items reflect intangible amortization expense of $498 million and other net expenses of $68 million associated with restructuring actions, costs associated with acquisitions and other net expenses. See page 17 for additional details regarding specified items.
2Q22
As Reported (GAAP)
Specified Items
As Adjusted
Intangible Amortization
$
507
$
(507)
$
—
Gross Margin
5,817
563
6,380
R&D
684
(32)
652
SG&A
2,757
(14)
2,743
Other (income) expense, net
(82)
(12)
(94)
Earnings before taxes
2,352
621
2,973
Taxes on Earnings
334
97
431
Net Earnings
2,018
524
2,542
Diluted Earnings per Share
$
1.14
$
0.29
$
1.43
Specified items reflect intangible amortization expense of $507 million and other net expenses of $114 million that includes costs associated with a product recall, acquisitions, and other net expenses. See page 18 for additional details regarding specified items.
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Page 13 of 20
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information
First Half Ended June 30, 2023 and 2022
(in millions, except per share data)
(unaudited)
1H23
As Reported (GAAP)
Specified Items
As Adjusted
Intangible Amortization
$
989
$
(989)
$
—
Gross Margin
9,922
1,049
10,971
R&D
1,369
(98)
1,271
SG&A
5,502
(24)
5,478
Other (income) expense, net
(287)
57
(230)
Earnings before taxes
3,198
1,114
4,312
Taxes on Earnings
505
99
604
Net Earnings
2,693
1,015
3,708
Diluted Earnings per Share
$
1.53
$
0.58
$
2.11
Specified items reflect intangible amortization expense of $989 million and other net expenses of $125 million associated with restructuring actions, costs associated with acquisitions and other expenses. See page 19 for additional details regarding specified items.
1H22
As Reported (GAAP)
Specified Items
As Adjusted
Intangible Amortization
$
1,019
$
(1,019)
$
—
Gross Margin
12,213
1,199
13,412
R&D
1,381
(65)
1,316
SG&A
5,544
(53)
5,491
Other (income) expense, net
(160)
(27)
(187)
Earnings before taxes
5,228
1,344
6,572
Taxes on Earnings
763
190
953
Net Earnings
4,465
1,154
5,619
Diluted Earnings per Share
$
2.51
$
0.65
$
3.16
Specified items reflect intangible amortization expense of $1.019 billion and other net expenses of $325 million that includes costs associated with a product recall, acquisitions, and other net expenses. See page 20 for additional details regarding specified items.
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Page 14 of 20
A reconciliation of the second-quarter tax rates for 2023 and 2022 is shown below:
2Q23
($ in millions)
Pre-Tax Income
Taxes on Earnings
Tax Rate
As reported (GAAP)
$
1,636
$
261
15.9
%
1)
Specified items
566
48
Excluding specified items
$
2,202
$
309
14.0
%
2Q22
($ in millions)
Pre-Tax Income
Taxes on Earnings
Tax Rate
As reported (GAAP)
$
2,352
$
334
14.2
%
Specified items
621
97
Excluding specified items
$
2,973
$
431
14.5
%
1)2023 Taxes on Earnings includes the recognition of approximately $40 million of net tax expense as a result of the resolution of various tax positions related to prior years.
A reconciliation of the year-to-date tax rates for 2023 and 2022 is shown below:
1H23
($ in millions)
Pre-Tax Income
Taxes on Earnings
Tax Rate
As reported (GAAP)
$
3,198
$
505
15.8
%
2)
Specified items
1,114
99
Excluding specified items
$
4,312
$
604
14.0
%
1H22
($ in millions)
Pre-Tax Income
Taxes on Earnings
Tax Rate
As reported (GAAP)
$
5,228
$
763
14.6
%
3)
Specified items
1,344
190
Excluding specified items
$
6,572
$
953
14.5
%
2)2023 Taxes on Earnings includes the recognition of approximately $62 million of net tax expense as a result of the resolution of various tax positions related to prior years.
3)2022 Taxes on Earnings includes the recognition of approximately $27 million of net tax expense as a result of the resolution of various tax positions related to prior years and approximately $32 million in excess tax benefits associated with share-based compensation.
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Page 15 of 20
Abbott Laboratories and Subsidiaries
Non-GAAP Revenue Reconciliation
Second Quarter and First Half Ended June 30, 2023 and 2022
($ in millions)
(unaudited)
2Q23
2Q22
% Change vs. 2Q22
Non-GAAP
Abbott Reported
Impact of CSI acquisition (a)
Impact from business exit (b)
Adjusted Revenue
Abbott Reported
Impact from business exit (b)
Adjusted Revenue
Reported
Adjusted
Organic
Total Company
9,978
(43)
(29)
9,906
11,257
(39)
11,218
(11.4)
(11.7)
(9.2)
U.S.
3,758
(39)
—
3,719
4,892
—
4,892
(23.2)
(24.0)
(24.0)
Intl
6,220
(4)
(29)
6,187
6,365
(39)
6,326
(2.3)
(2.2)
2.2
Total Nutrition
2,076
—
(29)
2,047
1,953
(39)
1,914
6.3
6.9
9.9
U.S.
881
—
—
881
761
—
761
15.7
15.7
15.7
Intl
1,195
—
(29)
1,166
1,192
(39)
1,153
0.3
1.2
6.1
Pediatric Nutrition
1,024
—
(29)
995
925
(39)
886
10.6
12.2
14.5
U.S.
507
—
—
507
413
—
413
22.5
22.5
22.5
Intl
517
—
(29)
488
512
(39)
473
1.1
3.3
7.5
Total Medical Devices
4,295
(43)
—
4,252
3,785
—
3,785
13.5
12.3
14.2
U.S.
1,913
(39)
—
1,874
1,688
—
1,688
13.3
11.0
11.0
Intl
2,382
(4)
—
2,378
2,097
—
2,097
13.6
13.4
16.8
Vascular
715
(43)
—
672
653
—
653
9.3
2.7
5.0
U.S.
264
(39)
—
225
228
—
228
15.4
(1.9)
(1.9)
Intl
451
(4)
—
447
425
—
425
6.1
5.2
8.7
1H23
1H22
% Change vs. 1H22
Non-GAAP
Abbott Reported
Impact of CSI acquisition (a)
Impact from business exit (b)
Adjusted Revenue
Abbott Reported
Impact from business exit (b)
Adjusted Revenue
Reported
Adjusted
Organic
Total Company
19,725
(43)
(37)
19,645
23,152
(91)
23,061
(14.8)
(14.8)
(11.9)
U.S.
7,686
(39)
—
7,647
9,829
—
9,829
(21.8)
(22.2)
(22.2)
Intl
12,039
(4)
(37)
11,998
13,323
(91)
13,232
(9.6)
(9.3)
(4.3)
Total Nutrition
4,043
—
(37)
4,006
3,847
(91)
3,756
5.1
6.7
10.1
U.S.
1,693
—
—
1,693
1,438
—
1,438
17.7
17.7
17.7
Intl
2,350
—
(37)
2,313
2,409
(91)
2,318
(2.4)
(0.1)
5.4
Pediatric Nutrition
1,948
—
(37)
1,911
1,772
(91)
1,681
9.9
13.7
16.3
U.S.
966
—
—
966
751
—
751
28.6
28.6
28.6
Intl
982
—
(37)
945
1,021
(91)
930
(3.8)
1.8
6.4
Total Medical Devices
8,195
(43)
—
8,152
7,379
—
7,379
11.0
10.4
13.3
U.S.
3,691
(39)
—
3,652
3,233
—
3,233
14.2
12.9
12.9
Intl
4,504
(4)
—
4,500
4,146
—
4,146
8.6
8.5
13.7
Vascular
1,332
(43)
—
1,289
1,272
—
1,272
4.7
1.3
4.4
U.S.
482
(39)
—
443
437
—
437
10.3
1.3
1.3
Intl
850
(4)
—
846
835
—
835
1.8
1.3
6.1
(a) Reflects the impact of the acquisition of Cardiovascular Systems, Inc. (CSI) on April 27, 2023.
(b) Reflects the impact of exiting the pediatric nutrition business in China. This action was initiated in December 2022.
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Page 16 of 20
Abbott Laboratories and Subsidiaries
Details of Specified Items
Second Quarter Ended June 30, 2023
(in millions, except per share data)
(unaudited)
Acquisition or Divestiture- related (a)
Restructuring and Cost Reduction Initiatives (b)
Intangible Amortization
Other (c)
Total Specifieds
Gross Margin
$
7
$
11
$
498
$
13
$
529
R&D
(8)
7
—
(71)
(72)
SG&A
(17)
(2)
—
(3)
(22)
Other (income) expense, net
47
—
—
10
57
Earnings before taxes
$
(15)
$
6
$
498
$
77
566
Taxes on Earnings (d)
48
Net Earnings
$
518
Diluted Earnings per Share
$
0.30
The table above provides additional details regarding the specified items described on page 13.
a)Acquisition-related expenses include legal and other costs related to business acquisitions as well as integration costs, which represent incremental costs directly related to integrating acquired businesses. These costs were more than offset by fair value adjustments to contingent consideration related to business acquisitions.
b)Restructuring and cost reduction initiative expenses include severance, outplacement and other direct costs associated with specific restructuring plans and cost reduction initiatives.
c)Other includes incremental costs to comply with the European Union's Medical Device Regulations (MDR) and In Vitro Diagnostics Medical Device Regulations (IVDR) requirements for previously approved products and charges for intangible asset impairments.
d)Reflects the net tax benefit associated with the specified items and tax expense as a result of the resolution of various tax positions related to prior years.
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Page 17 of 20
Abbott Laboratories and Subsidiaries
Details of Specified Items
Second Quarter Ended June 30, 2022
(in millions, except per share data)
(unaudited)
Acquisition or Divestiture- related (a)
Restructuring and Cost Reduction Initiatives (b)
Intangible Amortization
Other (c)
Total Specifieds
Gross Margin
$
20
$
(6)
$
507
$
42
$
563
R&D
(5)
—
—
(27)
(32)
SG&A
(7)
—
—
(7)
(14)
Other (income) expense, net
(4)
—
—
(8)
(12)
Earnings before taxes
$
36
$
(6)
$
507
$
84
621
Taxes on Earnings (d)
97
Net Earnings
$
524
Diluted Earnings per Share
$
0.29
The table above provides additional details regarding the specified items described on page 13.
a)Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for the integration of systems, processes and business activities.
b)Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. The Gross Margin amount includes a credit associated with the charges taken in the second quarter of 2021 for a restructuring plan related to Abbott's manufacturing network for COVID-19 diagnostic tests.
c)Other includes costs related to a voluntary recall within the Nutrition segment and incremental costs to comply with the MDR and IVDR regulations for previously approved products.
d)Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.
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Page 18 of 20
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Half Ended June 30, 2023
(in millions, except per share data)
(unaudited)
Acquisition or Divestiture- related (a)
Restructuring and Cost Reduction Initiatives (b)
Intangible Amortization
Other (c)
Total Specifieds
Gross Margin
$
12
$
32
$
989
$
16
$
1,049
R&D
(12)
8
—
(94)
(98)
SG&A
(21)
(6)
—
3
(24)
Other (income) expense, net
41
—
—
16
57
Earnings before taxes
$
4
$
30
$
989
$
91
1,114
Taxes on Earnings (d)
99
Net Earnings
$
1,015
Diluted Earnings per Share
$
0.58
The table above provides additional details regarding the specified items described on page 14.
a)Acquisition-related expenses include legal and other costs related to business acquisitions as well as integration costs, which represent incremental costs directly related to integrating acquired businesses. These costs were partially offset by fair value adjustments to contingent consideration related to business acquisitions.
b)Restructuring and cost reduction initiative expenses include severance, outplacement and other direct costs associated with specific restructuring plans and cost reduction initiatives.
c)Other includes incremental costs to comply with the MDR and IVDR regulations for previously approved products and charges for intangible asset impairments.
d)Reflects the net tax benefit associated with the specified items and tax expense as a result of the resolution of various tax positions related to prior years.
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Page 19 of 20
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Half Ended June 30, 2022
(in millions, except per share data)
(unaudited)
Acquisition or Divestiture- related (a)
Restructuring and Cost Reduction Initiatives (b)
Intangible Amortization
Other (c)
Total Specifieds
Gross Margin
$
41
$
(12)
$
1,019
$
151
$
1,199
R&D
(7)
(1)
—
(57)
(65)
SG&A
(18)
—
—
(35)
(53)
Other (income) expense, net
(11)
—
—
(16)
(27)
Earnings before taxes
$
77
$
(11)
$
1,019
$
259
1,344
Taxes on Earnings (d)
190
Net Earnings
$
1,154
Diluted Earnings per Share
$
0.65
The table above provides additional details regarding the specified items described on page 14.
a)Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for the integration of systems, processes and business activities.
b)Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. The Gross Margin amount includes a credit associated with the charges taken in the second quarter of 2021 for a restructuring plan related to Abbott's manufacturing network for COVID-19 diagnostic tests.
c)Other includes charges related to a voluntary recall within the Nutrition segment and incremental costs to comply with the MDR and IVDR regulations for previously approved products.
d)Reflects the net tax benefit associated with the specified items, excess tax benefits associated with share-based compensation and net tax expense as a result of the resolution of various tax positions related to prior years.
