Abbott Reports Second Quarter 2020 Results, Exceeds Analysts’ Expectations

- July 16th, 2020

Abbott today announced financial results for the second quarter ended June 30, 2020.

– Worldwide sales of $7.3 billion in the second quarter, including $615 million of COVID-19 diagnostic testing-related sales – Growth rates in business areas initially most impacted by COVID-19 improved significantly over the course of the second quarter – Abbott continues to strengthen its portfolio with several recent regulatory approvals, including FreeStyle Libre 2, TriClip and Gallant heart devices

Abbott (NYSE: ABT) today announced financial results for the second quarter ended June 30, 2020.

  • Second-quarter worldwide sales of $7.3 billion decreased 8.2 percent on a reported basis and 5.4 percent on an organic basis, which excludes the impact of foreign exchange.
  • Reported diluted EPS from continuing operations under GAAP was $0.30 and adjusted diluted EPS from continuing operations, which excludes specified items, was $0.57 in the second quarter.
  • Abbott projects full-year 2020 diluted EPS from continuing operations on a GAAP basis of at least $2.00 and full-year adjusted diluted EPS from continuing operations of at least $3.25.
  • In April, Abbott announced CE Mark approval for its TriClip heart valve repair system, the world’s first minimally invasive, clip-based tricuspid heart valve repair device.
  • In June, Abbott announced U.S. FDA approval of FreeStyle® Libre 2 as an integrated continuous glucose monitoring (iCGM) system for adults and children ages 4 and older with diabetes, achieving the highest level of accuracy and performance standards.1
  • Last week, Abbott announced U.S. FDA approval of its next-generation Gallant implantable cardioverter defibrillator and cardiac resynchronization therapy defibrillator devices to help manage heart rhythm disorders. These devices offer Bluetooth technology and a new patient smartphone app for improved remote monitoring and enhanced patient-physician engagement.

“Our diversified business model has proven to be a true strength during this time,” said Robert B. Ford, president and chief executive officer, Abbott. “We’re a leader in the global COVID-19 testing efforts, we’ve continued to advance our pipeline and, importantly, we saw significant improvements in growth trends throughout the quarter in the business areas that were initially most impacted by the pandemic.”

SECOND-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business. Organic sales growth excludes the impact of foreign exchange.

Following are sales by business segment and commentary for the second quarter 2020:

Total Company
($ in millions)

% Change vs. 2Q19
Sales 2Q20 Reported Organic
 U.S.   Int’l   Total  U.S. Int’l Total U.S. Int’l Total
Total * 2,638 4,690 7,328 (7.4) (8.6) (8.2) (7.4) (4.2) (5.4)
Nutrition 808 1,075 1,883 2.9 (1.4) 0.4 2.9 3.3 3.1
Diagnostics 857 1,137 1,994 23.2 (5.9) 4.7 23.2 (2.2) 7.1
Established Pharmaceuticals 1,013 1,013  n/a (8.6) (8.6)  n/a (0.7) (0.7)
Medical Devices 966 1,457 2,423 (29.0) (15.0) (21.2) (29.0) (12.7) (19.9)
* Total Q2 2020 Abbott sales from continuing operations include Other Sales of approximately $15 million.
% Change vs. 1H19
Sales 1H20 Reported Organic
 U.S.   Int’l   Total  U.S. Int’l Total U.S. Int’l Total
Total * 5,494 9,560 15,054 (1.9) (3.5) (3.0) (1.9) 0.0 (0.7)
Nutrition 1,620 2,167 3,787 5.7 1.5 3.3 5.7 4.7 5.1
Diagnostics 1,660 2,160 3,820 16.9 (7.1) 2.0 16.9 (3.9) 4.0
Established Pharmaceuticals 2,057 2,057  n/a (2.1) (2.1)  n/a 4.0 4.0
Medical Devices 2,199 3,161 5,360 (16.6) (5.2) (10.2) (16.6) (2.7) (8.8)
* Total 1H 2020 Abbott sales from continuing operations include Other Sales of approximately $30 million.
n/a = Not Applicable.
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 2020 worldwide sales of $7.3 billion decreased 8.2 percent on a reported basis. On an organic basis, worldwide sales decreased 5.4 percent. First-half 2020 worldwide sales of $15.1 billion decreased 3.0 percent on a reported basis and 0.7 percent on an organic basis.

Nutrition
($ in millions)

% Change vs. 2Q19
Sales 2Q20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 808 1,075 1,883 2.9 (1.4) 0.4 2.9 3.3 3.1
Pediatric 484 540 1,024 2.1 (6.4) (2.6) 2.1 (2.2) (0.3)
Adult 324 535 859 4.2 4.3 4.3 4.2 9.3 7.4
% Change vs. 1H19
Sales 1H20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 1,620 2,167 3,787 5.7 1.5 3.3 5.7 4.7 5.1
Pediatric 1,002 1,111 2,113 8.0 (3.6) 1.6 8.0 (1.0) 3.0
Adult 618 1,056 1,674 2.2 7.6 5.5 2.2 11.5 7.9

Worldwide Nutrition sales increased 0.4 percent on a reported basis and 3.1 percent on an organic basis in the second quarter. Strong U.S. and international sales performance of Ensure®, Abbott’s market-leading complete and balanced nutrition brand, led to global Adult Nutrition sales growth of 7.4 percent on an organic basis. In Pediatric Nutrition, sales were led by U.S. growth of Pedialyte®, Abbott’s oral rehydration brand, as well as growth in Southeast Asia, which were offset by challenging conditions in Greater China.

For the first half of 2020, worldwide Nutrition sales increased 3.3 percent on a reported basis and 5.1 percent on an organic basis, including organic sales growth of 3.0 percent in Pediatric Nutrition and 7.9 percent in Adult Nutrition.

Diagnostics
($ in millions)

% Change vs. 2Q19
Sales 2Q20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 857 1,137 1,994 23.2 (5.9) 4.7 23.2 (2.2) 7.1
Core Laboratory 289 698 987 6.4 (22.2) (15.5) 6.4 (19.0) (13.1)
Molecular 144 215 359 276.7 209.9 233.6 276.7 222.1 241.4
Point of Care 79 39 118 (30.6) 25.8 (18.3) (30.6) 29.0 (17.6)
Rapid Diagnostics 345 185 530 26.9 (12.6) 9.6 26.9 (9.2) 11.0
% Change vs. 1H19
Sales 1H20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 1,660 2,160 3,820 16.9 (7.1) 2.0 16.9 (3.9) 4.0
Core Laboratory 556 1,420 1,976 6.7 (16.9) (11.4) 6.7 (14.0) (9.2)
Molecular 209 289 498 166.1 111.1 131.1 166.1 118.2 135.7
Point of Care 182 74 256 (18.0) 28.9 (8.4) (18.0) 31.4 (7.8)
Rapid Diagnostics 713 377 1,090 19.3 (10.9) 6.8 19.3 (7.8) 8.1

Worldwide Diagnostics sales increased 4.7 percent on a reported basis in the second quarter, including an unfavorable 2.4 percent effect of foreign exchange, and increased 7.1 percent on an organic basis.

In Core Laboratory Diagnostics, lower routine diagnostics testing due to COVID-19 was partially offset by sales of Abbott’s COVID-19 laboratory-based tests for the detection of the IgG antibody, which determines if someone was previously infected with the virus. Core Laboratory IgG antibody testing-related sales on Abbott’s Architect® and Alinity i platforms were $152 million in the quarter.

Molecular Diagnostics sales increased 233.6 percent on a reported basis and 241.4 percent on an organic basis in the second quarter. Strong growth was driven by demand for Abbott’s laboratory-based molecular tests for COVID-19 on its m2000 and Alinity m platforms. Molecular Diagnostics COVID-19 testing-related sales were $283 million in the quarter.

Rapid Diagnostics sales increased 9.6 percent on a reported basis and 11.0 percent on an organic basis in the second quarter. Lower base business sales were more than offset by strong demand for Abbott’s point-of-care COVID-19 molecular test on its ID NOW platform. Rapid Diagnostics COVID-19 testing-related sales were $180 million in the quarter.

Established Pharmaceuticals
($ in millions)

% Change vs. 2Q19
Sales 2Q20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 1,013 1,013  n/a (8.6) (8.6)  n/a (0.7) (0.7)
Key Emerging Markets 764 764  n/a (10.3) (10.3)  n/a (0.4) (0.4)
Other 249 249  n/a (2.6) (2.6)  n/a (1.5) (1.5)
% Change vs. 1H19
Sales 1H20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 2,057 2,057  n/a (2.1) (2.1)  n/a 4.0 4.0
Key Emerging Markets 1,577 1,577  n/a (1.7) (1.7)  n/a 5.9 5.9
Other 480 480  n/a (3.1) (3.1)  n/a (2.1) (2.1)

Established Pharmaceuticals sales decreased 8.6 percent on a reported basis in the second quarter and decreased 0.7 percent on an organic basis. For the first half of 2020, Established Pharmaceuticals sales decreased 2.1 percent on a reported basis and increased 4.0 percent on an organic basis.

Key Emerging Markets include India, Brazil, Russia and China along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott’s branded generics product portfolio. Sales in these geographies decreased 10.3 percent on a reported basis in the second quarter and decreased 0.4 percent on an organic basis. Sales growth in certain countries, including double-digit growth in China, was more than offset by lower demand due to the increased spread of COVID-19 across several emerging market countries, including Russia, Brazil and Colombia.

Medical Devices
($ in millions)

% Change vs. 2Q19
Sales 2Q20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 966 1,457 2,423 (29.0) (15.0) (21.2) (29.0) (12.7) (19.9)
Rhythm Management 185 216 401 (32.2) (21.3) (26.7) (32.2) (19.2) (25.7)
Electrophysiology 120 179 299 (37.2) (25.8) (30.8) (37.2) (24.7) (30.2)
Heart Failure 115 43 158 (22.9) (15.2) (20.9) (22.9) (13.3) (20.4)
Vascular 168 313 481 (37.6) (31.9) (34.0) (37.6) (29.9) (32.7)
Structural Heart 91 132 223 (40.1) (34.2) (36.7) (40.1) (33.0) (36.0)
Neuromodulation 85 21 106 (49.2) (52.0) (49.8) (49.2) (50.3) (49.4)
Diabetes Care 202 553 755 27.2 24.7 25.4 27.2 28.7 28.3
Vascular Product Lines:
   Coronary and Endovasculara 155 311 466 (36.5) (32.1) (33.6) (36.5) (30.0) (32.3)
a) Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.
% Change vs. 1H19
Sales 1H20 Reported Organic
U.S. Int’l Total U.S. Int’l Total U.S. Int’l Total
Total 2,199 3,161 5,360 (16.6) (5.2) (10.2) (16.6) (2.7) (8.8)
Rhythm Management 413 462 875 (21.3) (14.0) (17.6) (21.3) (11.7) (16.4)
Electrophysiology 284 403 687 (22.2) (14.4) (17.8) (22.2) (12.9) (17.0)
Heart Failure 267 94 361 (8.6) 1.7 (6.1) (8.6) 4.0 (5.6)
Vascular 398 708 1,106 (25.7) (21.6) (23.1) (25.7) (19.7) (21.9)
Structural Heart 227 314 541 (21.3) (19.1) (20.0) (21.3) (17.1) (18.9)
Neuromodulation 222 61 283 (30.7) (28.1) (30.1) (30.7) (25.2) (29.5)
Diabetes Care 388 1,119 1,507 25.1 30.4 29.0 25.1 34.3 31.9
Vascular Product Lines:
   Coronary and Endovasculara 366 703 1,069 (23.6) (21.8) (22.4) (23.6) (19.8) (21.1)
a) Includes drug-eluting stents, balloon catheters, guidewires, vascular imaging/diagnostics products, vessel closure, carotid and other coronary and peripheral products.

Worldwide Medical Devices sales decreased 21.2 percent on a reported basis in the second quarter and decreased 19.9 percent on an organic basis. Sales growth was negatively impacted by reduced cardiovascular and neuromodulation procedure volumes due to COVID-19. Procedure volume trends improved significantly over the course of the second quarter as both demand for procedures and availability of healthcare resources began to return to more normalized levels.

In Diabetes Care, strong growth was led by FreeStyle Libre, which grew 36.8 percent on a reported basis and 39.9 percent on an organic basis versus the prior year. In June, Abbott announced U.S. FDA approval of FreeStyle Libre 2 as an integrated continuous glucose monitoring (iCGM) system for adults and children ages 4 and older with diabetes, achieving the highest level of accuracy and performance standards.1 The FreeStyle Libre 2 system will be available in the coming weeks at participating pharmacies and durable medical equipment providers at the same price as the currently available FreeStyle Libre 14 day system.

ABBOTT’S GUIDANCE FOR 2020
Abbott projects full-year 2020 diluted earnings per share from continuing operations under GAAP of at least $2.00. Abbott forecasts specified items for the full-year 2020 of $1.25 primarily related to intangible amortization, acquisition-related expenses, restructuring and cost reduction initiatives and other expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be at least $3.25 for full-year 2020.

ABBOTT DECLARES 386TH CONSECUTIVE QUARTERLY DIVIDEND
On June 12, 2020, the board of directors of Abbott declared the company’s quarterly dividend of $0.36 per share. Abbott’s cash dividend is payable August 17, 2020, to shareholders of record at the close of business on July 15, 2020.

Abbott has increased its dividend payout for 48 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 107,000 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 and @AbbottGlobal.

Abbott will webcast its live 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 that day.

 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, including the impact of the COVID-19 pandemic on Abbott’s operations and financial results, 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, 2019 and in Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, 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.

1 Based on FDA iCGM special controls.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Second Quarter Ended June 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
2Q20 2Q19 %
Change
Net Sales $7,328 $7,979 (8.2)
Cost of products sold, excluding amortization expense 3,263 3,279 (0.5)
Amortization of intangible assets 553 483 14.7
Research and development 564 577 (2.1)
Selling, general, and administrative 2,276 2,434 (6.5)
Total Operating Cost and Expenses 6,656 6,773 (1.7)
Operating Earnings 672 1,206 (44.3)
Interest expense, net 125 146 (15.3)
Net foreign exchange (gain) loss (1) (4) (81.2)
Other (income) expense, net 22 (38) n/m
Earnings from Continuing Operations before taxes 526 1,102 (52.3)
Tax expense (benefit) on Earnings from Continuing Operations (11) 96 n/m 1)
Earnings from Continuing Operations 537 1,006 (46.6)
Earnings from Discontinued Operations, net of taxes n/m
Net Earnings $537 $1,006 (46.6)
Earnings from Continuing Operations, excluding
Specified Items, as described below $1,018 $1,465 (30.5) 2)
Diluted Earnings per Common Share from:
Continuing Operations $0.30 $0.56 (46.4)
Discontinued Operations n/m
Total $0.30 $0.56 (46.4)
Diluted Earnings per Common Share from Continuing
Operations, excluding Specified Items, as described below $0.57 $0.82 (30.5) 2)
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options 1,785 1,781
NOTES:
See tables titled “Non-GAAP Reconciliation of Financial Information From Continuing Operations” for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
See footnotes below.
1) 2020 Tax expense (benefit) on Earnings from Continuing Operations includes the recognition of approximately $80 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $20 million in excess tax benefits associated with share-based compensation.
2) 2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $481 million, or $0.27 per share, for intangible amortization expense, other expenses primarily associated with acquisitions and restructuring actions and charges for equity investment impairments.
2019 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $459 million, or $0.26 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.
Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
First Half Ended June 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
1H20 1H19 %
Change
Net Sales $15,054 $15,514 (3.0)
Cost of products sold, excluding amortization expense 6,544 6,439 1.6
Amortization of intangible assets 1,114 969 15.0
Research and development 1,142 1,249 (8.6) 1)
Selling, general, and administrative 4,824 4,912 (1.8)
Total Operating Cost and Expenses 13,624 13,569 0.4
Operating Earnings 1,430 1,945 (26.5)
Interest expense, net 246 294 (16.5)
Net foreign exchange (gain) loss 4 2 n/m
Other (income) expense, net 21 (85) n/m
Earnings from Continuing Operations before taxes 1,159 1,734 (33.2)
Tax expense (benefit) on Earnings from Continuing Operations 78 56 40.3 2)
Earnings from Continuing Operations 1,081 1,678 (35.6)
Earnings from Discontinued Operations, net of taxes 20 n/m
Net Earnings $1,101 $1,678 (34.4)
Earnings from Continuing Operations, excluding
Specified Items, as described below $2,180 $2,591 (15.8) 3)
Diluted Earnings per Common Share from:
Continuing Operations $0.60 $0.94 (36.2)
Discontinued Operations 0.01 n/m
Total $0.61 $0.94 (35.1)
Diluted Earnings per Common Share from Continuing
Operations, excluding Specified Items, as described below $1.22 $1.45 (15.9) 3)
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options 1,783 1,779
NOTES:
See tables titled “Non-GAAP Reconciliation of Financial Information From Continuing Operations” for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
See footnotes below.
1) In the first six months of 2019, in conjunction with the acquisition of Cephea Valve Technologies, Inc., Abbott acquired an R&D asset valued at $102 million, which was immediately expensed.
2) 2020 Tax expense (benefit) on Earnings from Continuing Operations includes the recognition of approximately $80 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $70 million in excess tax benefits associated with share-based compensation.
2019 Tax expense (benefit) on Earnings from Continuing Operations includes the impact of a $78 million reduction of the transition tax associated with the Tax Cuts and Jobs Act (TCJA) and approximately $90 million in excess tax benefits associated with share-based compensation.
3) 2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.099 billion, or $0.62 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.
2019 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $913 million, or $0.51 per share, for intangible amortization expense and other expenses primarily associated with acquisitions and restructuring actions.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
Second Quarter Ended June 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
2Q20
As
Reported
(GAAP)
Specified
Items
As
Adjusted 
% to
Sales
Intangible Amortization $            553 $      (553) $           –
Gross Margin 3,512 591 4,103 56.0%
R&D 564 (28) 536 7.3%
SG&A 2,276 (24) 2,252 30.7%
Other (income) expense, net 22 (68) (46)
Earnings from Continuing Operations before taxes  526 711 1,237
Tax expense (benefit) on Earnings from Continuing Operations (11) 230 219
Earnings from Continuing Operations 537 481 1,018
Diluted Earnings per Share from Continuing Operations $0.30 $0.27 $0.57
Specified items reflect intangible amortization expense of $553 million and other expenses of $158 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled “Details of Specified Items” for additional details regarding specified items.
2Q19
As
Reported
(GAAP)
Specified
Items
As
Adjusted 
% to
Sales
Intangible Amortization $            483 $      (483) $           –
Gross Margin 4,217 522 4,739 59.4%
R&D 577 (12) 565 7.1%
SG&A 2,434 (46) 2,388 29.9%
Other (income) expense, net (38) (16) (54)
Earnings from Continuing Operations before taxes  1,102 596 1,698
Tax expense (benefit) on Earnings from Continuing Operations 96 137 233
Earnings from Continuing Operations 1,006 459 1,465
Diluted Earnings per Share from Continuing Operations $0.56 $0.26 $0.82
Specified items reflect intangible amortization expense of $483 million and other expenses of $113 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled “Details of Specified Items” for additional details regarding specified items.
Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
First Half Ended June 30, 2020 and 2019
(in millions, except per share data)
(unaudited)
1H20
As
Reported
(GAAP) 
Specified
Items
As
Adjusted
% to
Sales
Intangible Amortization $    1,114 $   (1,114) $           –
Gross Margin 7,396 1,190 8,586 57.0%
R&D 1,142 (43) 1,099 7.3%
SG&A 4,824 (82) 4,742 31.5%
Other (income) expense, net 21 (110) (89)
Earnings from Continuing Operations before taxes 1,159 1,425 2,584
Tax expense (benefit) on Earnings from Continuing Operations 78 326 404
Earnings from Continuing Operations 1,081 1,099 2,180
Diluted Earnings per Share from Continuing Operations $0.60 $0.62 $1.22
Specified items reflect intangible amortization expense of $1.114 billion and other expenses of $311 million, primarily associated with acquisitions, restructuring actions and other expenses. See table titled “Details of Specified Items” for additional details regarding specified items.
1H19
As
Reported
(GAAP)
Specified
Items
As
Adjusted 
% to
Sales
Intangible Amortization $            969 $      (969) $           –
Gross Margin 8,106 1,049 9,155 59.0%
R&D 1,249 (127) 1,122 7.2%
SG&A 4,912 (91) 4,821 31.1%
Other (income) expense, net (85) (29) (114)
Earnings from Continuing Operations before taxes 1,734 1,296 3,030
Tax expense (benefit) on Earnings from Continuing Operations 56 383 439
Earnings from Continuing Operations 1,678 913 2,591
Diluted Earnings per Share from Continuing Operations $0.94 $0.51 $1.45
Specified items reflect intangible amortization expense of $969 million and other expenses of $327 million, primarily associated with acquisitions, restructuring actions and other expenses. See tables titled “Details of Specified Items” for additional details regarding specified items.
A reconciliation of the second-quarter tax rates for continuing operations for 2020 and 2019 is shown below:
2Q20
($ in millions) Pre-Tax
Income
Taxes on
Earnings
Tax
Rate
As reported (GAAP) $526 $         (11) (2.1%) 1)
Specified items 711 230
Excluding specified items $1,237 $219 17.7%
2Q19
($ in millions) Pre-Tax
Income
Taxes on
Earnings
Tax
Rate
As reported (GAAP) $1,102 $96 8.7%
Specified items 596 137
Excluding specified items $1,698 $233 13.7%
1) 2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $80 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $20 million in excess tax benefits associated with share-based compensation.
A reconciliation of the year-to-date tax rates for continuing operations for 2020 and 2019 is shown below:
1H20
($ in millions) Pre-Tax
Income
Taxes on
Earnings
Tax
Rate
As reported (GAAP) $1,159 $78 6.7% 2)
Specified items 1,425 326
Excluding specified items $2,584 $404 15.6%
1H19
($ in millions) Pre-Tax
Income
Taxes on
Earnings
Tax
Rate
As reported (GAAP) $1,734 $56 3.2% 3)
Specified items 1,296 383
Excluding specified items $3,030 $439 14.5%
2) 2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $80 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $70 million in excess tax benefits associated with share-based compensation.
3) Reported tax rate on a GAAP basis for 2019 includes the impact of a $78 million reduction of the transition tax associated with the TCJA and approximately $90 million in excess tax benefits associated with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Second Quarter Ended June 30, 2020
(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 $               22 $              15 $           553 $          1 $       591
R&D (3) (2) (23) (28)
SG&A (27) 3 (24)
Other (income) expense, net (3) (65) (68)
Earnings from Continuing Operations before taxes $               55 $              14 $           553 $        89 711
Tax expense on Earnings from Continuing Operations (d) 230
Earnings from Continuing Operations $       481
Diluted Earnings per Share from Continuing Operations $      0.27
The table above provides additional details regarding the specified items described on the tables titled “Non-GAAP Reconciliation of Financial Information From Continuing Operations.”
a) Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and 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. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.
c) Other primarily relates to the impairment of equity investments and the costs to acquire research and development assets.
d) Reflects the net tax benefit associated with the specified items, the resolution of prior years’ tax positions and excess tax benefits associated with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
Second Quarter Ended June 30, 2019
(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 $               18 $              21 $           483 $         — $       522
R&D (7) (5) (12)
SG&A (44) (2) (46)
Other (income) expense, net (7) (9) (16)
Earnings from Continuing Operations before taxes $               76 $              28 $           483 $          9 596
Tax expense on Earnings from Continuing Operations (d) 137
Earnings from Continuing Operations $       459
Diluted Earnings per Share from Continuing Operations $      0.26
The table above provides additional details regarding the specified items described on tables titled “Non-GAAP Reconciliation of Financial Information From Continuing Operations.”
a) Acquisition-related expenses include costs for tax and other services related to business acquisitions, integration costs which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities, and fair value adjustments to contingent consideration related to a business acquisition.
b) Restructuring and cost reduction initiative expenses include severance, outplacement, inventory write-downs, asset impairments, accelerated depreciation, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.
c) Other primarily relates to the impairment of an equity investment.
d) Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Half Ended June 30, 2020
(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 $               45 $              30 $        1,114 $          1 $     1,190
R&D (7) (8) $       (28) (43)
SG&A (55) (27) (82)
Other (income) expense, net (1) (109) (110)
Earnings from Continuing Operations before taxes $             108 $              65 $        1,114 $      138 1,425
Tax expense on Earnings from Continuing Operations (d) 326
Earnings from Continuing Operations $     1,099
Diluted Earnings per Share from Continuing Operations $      0.62
The table above provides additional details regarding the specified items described on tables titled “Non-GAAP Reconciliation of Financial Information From Continuing Operations.”
a) Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and 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. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.
c) Other primarily relates to the impairment of equity investments and the costs to acquire research and development assets.
d) Reflects the net tax benefit associated with the specified items, the resolution of prior years’ tax positions and excess tax benefits associated with share-based compensation.
Abbott Laboratories and Subsidiaries
Details of Specified Items
First Half Ended June 30, 2019
(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 $               37 $              43 $           969 $         — $     1,049
R&D (14) (10) (103) (127)
SG&A (87) (4) (91)
Other (income) expense, net (10) (19) (29)
Earnings from Continuing Operations before taxes $             148 $              57 $           969 $      122 1,296
Tax expense on Earnings from Continuing Operations (d) 383
Earnings from Continuing Operations $       913
Diluted Earnings per Share from Continuing Operations $      0.51
The table above provides additional details regarding the specified items described on tables titled “Non-GAAP Reconciliation of Financial Information From Continuing Operations.”
a) Acquisition-related expenses include costs for tax and other services related to business acquisitions, integration costs which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities, and fair value adjustments to contingent consideration related to a business acquisition.
b) Restructuring and cost reduction initiative expenses include severance, outplacement, inventory write-downs, asset impairments, accelerated depreciation, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.
c) Other relates to the acquisition of an R&D asset and charges related to the impairment of certain assets.
d) Reflects the net tax benefit associated with the specified items, a reduction in the transition tax associated with the TCJA and excess tax benefits associated with share-based compensation.

Cision View original content:http://www.prnewswire.com/news-releases/abbott-reports-second-quarter-2020-results-exceeds-analysts-expectations-301094737.html

SOURCE Abbott

PR Newswire
July 16, 2020 – 4:30 AM PDT
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