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0000001800 false Common Shares, Without Par Value ABT 0000001800 2021-10-20 2021-10-20 0000001800 us-gaap:CommonStockMember exch:XCHI 2021-10-20 2021-10-20 0000001800 us-gaap:CommonStockMember exch:XNYS 2021-10-20 2021-10-20 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
   

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

October 20, 2021

Date of Report (Date of earliest event reported)

 

ABBOTT LABORATORIES

(Exact name of registrant as specified in charter)

 

 

 

Illinois   1-2189   36-0698440
(State or other Jurisdiction   (Commission File Number)   (IRS Employer
of Incorporation)       Identification No.)

 

 

 

100 Abbott Park Road

Abbott Park, Illinois 60064-6400

(Address of principal executive offices)(Zip Code)

 

Registrant’s telephone number, including area code:  (224) 667-6100

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨                 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨                 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨                 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨                 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading
Symbol(s)

Name of Each Exchange

on Which Registered

Common Shares, Without Par Value ABT New York Stock Exchange
 Chicago Stock Exchange, Inc.

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

 

 

 

Item 2.02Results of Operations and Financial Condition

 

On October 20, 2021, Abbott Laboratories announced its results of operations for the third quarter 2021.

 

Furnished as Exhibit 99.1, and incorporated herein by reference, is the news release issued by Abbott announcing those results.  In that news release, Abbott uses various non-GAAP financial measures including, among others, net earnings from continuing operations excluding specified items.  These non-GAAP financial measures adjust for factors that are unusual or unpredictable, such as expenses primarily associated with acquisitions, restructuring actions, cost reduction initiatives, certain litigation, the acquisition of an R&D asset, the impairment of certain assets, the gain on the disposition of an equity method investment, tax benefits associated with specified items, and excess tax benefits associated with share-based compensation. These non-GAAP financial measures also exclude intangible amortization expense to provide greater visibility on the results of operations excluding these costs, similar to how Abbott’s management internally assesses performance.  Abbott’s management believes the presentation of these non-GAAP financial measures provides useful information to investors regarding Abbott’s results of operations as these non-GAAP financial measures allow investors to better evaluate ongoing business performance.  Abbott’s management also uses these non-GAAP financial measures internally to monitor performance of the businesses.  Abbott, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

 

Item 9.01Financial Statements and Exhibits

 

Exhibit No.   Exhibit
     
99.1   Press Release dated October 20, 2021 (furnished pursuant to Item 2.02).
     
104   Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  ABBOTT LABORATORIES
   
   
Date: October 20, 2021 By: /s/ Robert E. Funck, Jr.
    Robert E. Funck, Jr.
    Executive Vice President, Finance
and Chief Financial Officer

 

 

 

Exhibit 99.1

 

News Release

 

Abbott Reports Third-Quarter 2021 Results; Achieves Strong Double-Digit Earnings Growth and Raises Guidance

 

-Third-quarter sales growth of 23.4 percent; organic sales growth of 22.4 percent

-GAAP diluted EPS from continuing operations growth of 69.6 percent; adjusted diluted EPS growth of 42.9 percent

-Global COVID-19 testing-related sales were $1.9 billion in the third quarter

-Excluding COVID-19 testing-related sales, third-quarter sales grew 11.7 percent on both a reported and organic basis compared to sales in 2019

-Continues to strengthen portfolio with several new product approvals

 
 

ABBOTT PARK, Ill., Oct. 20, 2021 — Abbott today announced financial results for the third quarter ended Sept. 30, 2021.

·Third-quarter sales of $10.9 billion increased 23.4 percent on a reported basis and 22.4 percent on an organic basis, which excludes the impact of foreign exchange.

·Third-quarter GAAP diluted EPS was $1.17 and adjusted diluted EPS, which excludes specified items, was $1.40, reflecting 42.9 percent growth versus the prior year.1

·Abbott projects full-year 2021 diluted EPS from continuing operations on a GAAP basis of $3.55 to $3.65 and full-year adjusted diluted EPS from continuing operations of $5.00 to $5.10, reflecting growth of 38.4 percent at the mid-point versus prior year.2

·In August, Abbott announced U.S. FDA approval of its Amplatzer® Amulet® device, which offers immediate closure of the left atrial appendage – an area in the heart where blood clots can form.

·In August, Abbott announced results of the company's GUIDE-HF clinical trial, which showed Abbott's CardioMEMS® remote monitoring system can improve care for more patients living with heart failure. Abbott filed a Premarket Approval (PMA) supplement with the FDA for consideration of an expanded indication for CardioMEMS.

·In September, Abbott announced U.S. FDA approval of its Portico® with FlexNav® transcatheter aortic valve replacement (TAVR) system to treat people with symptomatic, severe aortic stenosis who are at high or extreme risk for open-heart surgery.

·During the third quarter, Abbott acquired Walk Vascular, LLC, a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots.

 

"We achieved another quarter of strong growth overall and across all four of our major business areas," said Robert B. Ford, president and chief executive officer, Abbott. "We're particularly pleased with the continued advancements of our new product pipeline, including several recent launches in large, high-growth markets."

 

—more—

 

 

 

 

THIRD-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 third quarter 2021:

 

Total Company

($ in millions)

 

               % Change vs. 3Q20 
   Sales 3Q21   Reported   Organic 
   U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
Total *   4,368    6,560    10,928    31.2    18.7    23.4    31.2    17.0    22.4 
Nutrition   919    1,189    2,108    12.3    7.6    9.6    12.3    6.5    8.9 
Diagnostics   1,947    1,965    3,912    71.8    30.5    48.2    71.8    28.0    46.8 
Established Pharmaceuticals   --    1,265    1,265     n/a     15.1    15.1     n/a     15.3    15.3 
Medical Devices   1,496    2,136    3,632    9.7    18.2    14.6    9.7    15.7    13.1 

 

* Total Q3 2021 Abbott sales from continuing operations include Other Sales of approximately $11 million.

 

               % Change vs. 9M20 
   Sales 9M21   Reported   Organic 
   U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
Total *   11,787    19,820    31,607    33.6    31.4    32.2    33.6    27.3    29.6 
Nutrition   2,628    3,624    6,252    7.8    10.7    9.5    7.8    8.7    8.3 
Diagnostics   4,743    6,430    11,173    69.8    75.3    73.0    69.8    68.7    69.2 
Established Pharmaceuticals   --    3,515    3,515     n/a     11.4    11.4     n/a     12.0    12.0 
Medical Devices   4,385    6,233    10,618    23.1    25.5    24.5    23.1    19.0    20.7 

 

* Total 9M 2021 Abbott sales from continuing operations include Other Sales of approximately $49 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.

 

Third-quarter 2021 worldwide sales of $10.9 billion increased 23.4 percent on a reported basis and 22.4 percent on an organic basis.

 

Compared to pre-pandemic sales in 2019, worldwide sales, excluding COVID-19 testing-related sales3, increased 11.7 percent on both a reported and organic basis in the third quarter.

  

2

 

 

Nutrition

($ in millions)

 

                % Change vs. 3Q20 
    Sales 3Q21   Reported   Organic 
    U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
 Total    919    1,189    2,108    12.3    7.6    9.6    12.3    6.5    8.9 
 Pediatric    586    514    1,100    20.2    (0.8)   9.4    20.2    (2.2)   8.6 
 Adult    333    675    1,008    0.6    15.0    9.8    0.6    14.1    9.3 

 

        % Change vs. 9M20 
    Sales 9M21   Reported   Organic 
    U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
 Total    2,628    3,624    6,252    7.8    10.7    9.5    7.8    8.7    8.3 
 Pediatric    1,622    1,637    3,259    8.9    0.5    4.5    8.9    (1.7)   3.4 
 Adult    1,006    1,987    2,993    6.0    20.9    15.5    6.0    18.9    

14.2

 

 

Worldwide Nutrition sales increased 9.6 percent on a reported basis and 8.9 percent on an organic basis in the third quarter. Strong performance of Ensure®, Abbott's market-leading complete and balanced nutrition brand, and Glucerna®, Abbott's market-leading diabetes nutrition brand, led to global Adult Nutrition sales growth of 9.8 percent on a reported basis and 9.3 percent on an organic basis.

 

Worldwide Pediatric Nutrition sales increased 9.4 percent on a reported basis and 8.6 percent on an organic basis. Strong performance of Abbott's market-leading oral hydration brand, Pedialyte®, and continued share growth in infant nutrition led to U.S. Pediatric Nutrition growth of 20.2 percent.

 

3

 

 

 

Diagnostics

($ in millions)

 

               % Change vs. 3Q20 
   Sales 3Q21   Reported   Organic 
   U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
Total   1,947    1,965    3,912    71.8    30.5    48.2    71.8    28.0    46.8 
Core Laboratory   291    1,001    1,292    2.4    12.2    9.9    2.4    9.9    8.1 
Molecular   162    183    345    (26.2)   (23.1)   (24.6)   (26.2)   (25.0)   (25.6)
Point of Care   100    35    135    3.9    1.5    3.3    3.9    (0.1)   2.8 
Rapid Diagnostics   1,394    746    2,140    161.4    118.5    144.7    161.4    115.0    143.3 

 

               % Change vs. 9M20 
   Sales 9M21   Reported   Organic 
   U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
Total   4,743    6,430    11,173    69.8    75.3    73.0    69.8    68.7    69.2 
Core Laboratory   845    2,935    3,780    0.6    26.9    19.9    0.6    22.1    16.4 
Molecular   431    651    1,082    0.5    23.5    13.2    0.5    17.6    9.9 
Point of Care   289    112    401    4.0    2.5    3.6    4.0    (1.0)   2.6 
Rapid Diagnostics   3,178    2,732    5,910    154.9    280.1    200.7    154.9    266.6    195.8 

 

Worldwide Diagnostics sales increased 48.2 percent on a reported basis in the third quarter and increased 46.8 percent on an organic basis. Global COVID-19 testing-related sales were $1.9 billion in the third quarter, led by combined sales of $1.6 billion from Abbott's BinaxNOW®, Panbio® and ID NOW® rapid testing platforms. Excluding COVID-19 testing-related sales, worldwide diagnostics sales increased 14.1 percent on a reported basis in the third quarter and 12.5 percent on an organic basis.4

 

Compared to the pre-pandemic 2019 baseline, sales in Core Laboratory and Molecular Diagnostics, excluding COVID-19 testing-related sales, grew 5.8 percent and 14.9 percent, respectively, on a reported basis in the third quarter and grew 4.9 percent and 13.6 percent, respectively, on an organic basis.5

 

4

 

 

Established Pharmaceuticals

($ in millions)

 

               % Change vs. 3Q20
   Sales 3Q21   Reported  Organic 
   U.S.   Int'l   Total   U.S.  Int'l   Total   U.S.   Int'l   Total 
Total   --    1,265    1,265    n/a   15.1    15.1     n/a     15.3    15.3 
Key Emerging Markets   --    936    936    n/a   17.1    17.1     n/a     17.9    17.9 
Other   --    329    329    n/a   9.7    9.7     n/a     8.5    8.5 

 

               % Change vs. 9M20
   Sales 9M21   Reported  Organic 
   U.S.   Int'l   Total   U.S.  Int'l   Total   U.S.   Int'l   Total 
Total   --    3,515    3,515    n/a   11.4    11.4     n/a     12.0    12.0 
Key Emerging Markets   --    2,672    2,672    n/a   12.4    12.4     n/a     14.2    14.2 
Other   --    843    843    n/a   8.1    8.1     n/a     5.4    5.4 

 

Established Pharmaceuticals sales increased 15.1 percent on a reported basis in the third quarter and increased 15.3 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 increased 17.1 percent on a reported basis in the quarter and increased 17.9 percent on an organic basis. Organic sales growth was led by strong growth across several geographies, including China, Russia and India.

 

Other sales increased 9.7 percent on a reported basis in the quarter and increased 8.5 percent on an organic basis.

 

5

 

 

Medical Devices

($ in millions)

 

               % Change vs. 3Q20 
   Sales 3Q21   Reported   Organic 
   U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
Total   1,496    2,136    3,632    9.7    18.2    14.6    9.7    15.7    13.1 
Rhythm Management   266    305    571    9.6    15.3    12.6    9.6    12.7    11.2 
Electrophysiology   192    293    485    (0.1)   17.6    9.9    (0.1)   15.9    8.9 
Heart Failure   170    59    229    17.6    28.0    20.1    17.6    25.4    19.5 
Vascular   219    425    644    (4.3)   6.3    2.5    (4.3)   3.9    0.9 
Structural Heart   177    215    392    11.2    10.9    11.0    11.2    9.2    10.1 
Neuromodulation   149    41    190    (12.5)   13.8    (7.9)   (12.5)   11.5    (8.3)
Diabetes Care   323    798    1,121    43.1    29.4    33.0    43.1    26.0    30.6 

 

               % Change vs. 9M20 
   Sales 9M21   Reported   Organic 
   U.S.   Int'l   Total   U.S.   Int'l   Total   U.S.   Int'l   Total 
Total   4,385    6,233    10,618    23.1    25.5    24.5    23.1    19.0    20.7 
Rhythm Management   776    881    1,657    18.5    21.2    19.9    18.5    14.9    16.6 
Electrophysiology   580    823    1,403    21.8    26.2    24.4    21.8    20.9    21.3 
Heart Failure   483    167    650    17.5    18.7    17.8    17.5    12.5    16.2 
Vascular   684    1,292    1,976    8.9    16.7    13.9    8.9    11.2    10.4 
Structural Heart   537    654    1,191    39.0    28.8    33.2    39.0    22.3    29.5 
Neuromodulation   460    124    584    17.4    28.3    19.6    17.4    20.8    18.1 
Diabetes Care   865    2,292    3,157    41.0    32.0    34.3    41.0    24.3    28.7 

 

Worldwide Medical Devices sales increased 14.6 percent on a reported basis in the third quarter and increased 13.1 percent on an organic basis. Strong growth in the quarter was driven by continued recovery from the COVID-19 pandemic and strong growth in Diabetes Care.

 

Compared to pre-pandemic sales in 2019, Medical Devices sales increased 18.5 percent on a reported basis and 16.1 percent on an organic basis in the third quarter, led by double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care.6

 

In Diabetes Care, FreeStyle Libre® and Libre Sense™ sales were $968 million in the quarter, which represents sales growth of 41.6 percent on a reported basis and 38.8 percent on an organic basis.

 

During the quarter, Abbott continued to strengthen its Medical Devices portfolio with several new products, including:

 

·U.S. FDA approval of Amplatzer Amulet Left Atrial Appendage Occluder to treat people with atrial fibrillation who are at risk of ischemic stroke.

 

·U.S. FDA approval of Portico with FlexNav transcatheter aortic valve replacement (TAVR) system to treat people with symptomatic, severe aortic stenosis who are at high risk for open-heart surgery.

 

·U.S. FDA approval of Amplatzer™ Talisman™ PFO Occlusion System to treat people with a patent foramen ovale – a small opening between the upper chambers of the heart – who are at risk of recurrent ischemic stroke.

 

·Abbott acquired Walk Vascular, LLC, a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots.

 

6

 

 

  

Abbott'S EARNINGS-PER-SHARE guidance 

Abbott projects 2021 diluted earnings per share from continuing operations under GAAP of $3.55 to $3.65. Abbott forecasts specified items for the full-year 2021 of $1.45 per share primarily related to intangible amortization, restructuring and cost reduction initiatives, including expenses to align its COVID-19 testing-related business with changes during the year in current and projected testing demand, expenses associated with acquisitions and other net expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $5.00 to $5.10 for full-year 2021.

 

Abbott declares 391st consecutive QUARTERLY DIVIDEND 

On Sept. 15, 2021, the board of directors of Abbott declared the company's quarterly dividend of $0.45 per share. Abbott's cash dividend is payable Nov. 15, 2021 to shareholders of record at the close of business on Oct. 15, 2021.

 

Abbott has increased its dividend payout for 49 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 109,000 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 third-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the webcast will be available later that day.

 

7

 

 

— 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, 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.

 

 

Abbott Financial: 

Scott Leinenweber, 224-668-0791 

Michael Comilla, 224-668-1872 

Laura Dauer, 224-667-2299  

 

Abbott Media: 

Katie Stafford, 224-668-2121 

Kate Dyer, 224-668-9965 

  
 

  

1Third-quarter 2021 diluted EPS from continuing operations on a GAAP basis reflects 69.6 percent growth.

      

2Full-year 2021 guidance for diluted EPS from continuing operations on a GAAP basis reflects growth of 44.5 percent at the mid-point versus prior year.

   

3In the third quarter of 2019, worldwide sales were $8.076 billion. In the third quarter of 2021, COVID-19 testing-related sales were $1.908 billion. In the nine months of 2019, worldwide sales were $23.590 billion. In the nine months of 2021, COVID-19 testing-related sales were $5.360 billion.

   

4In the third quarter of 2020, Diagnostics sales were $2.64 billion, which included COVID-19 testing-related sales of $0.9 billion.

   

5In the third quarter of 2019, Core Laboratory and Molecular Diagnostics sales were $1.177 billion and $111 million, respectively. In the third quarter of 2021, COVID-19 testing-related sales for Core Laboratory and Molecular Diagnostics were $47 million and $218 million, respectively.

   

6In the third quarter of 2019, Medical Devices sales were $3.065 billion.

 

8

 

 

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Third Quarter Ended September 30, 2021 and 2020

(in millions, except per share data)

(unaudited)

 

    3Q21    3Q20    % Change 
Net Sales  $10,928   $8,853    23.4 
                
Cost of products sold, excluding amortization expense   4,423    3,966    11.5 
Amortization of intangible assets   520    510    1.8 
Research and development   672    580    16.1 
Selling, general, and administrative   2,767    2,302    20.2 
Total Operating Cost and Expenses   8,382    7,358    13.9 
                
Operating Earnings   2,546    1,495    70.2 
                
Interest expense, net   123    127    (3.3)
Net foreign exchange (gain) loss   4    (7)   n/m 
Other (income) expense, net   (74)   (46)   63.1 
Earnings from Continuing Operations before taxes   2,493    1,421    75.3 
                
Tax expense on Earnings from Continuing Operations   393    189    107.3 1)
Earnings from Continuing Operations   2,100    1,232    70.4 
                
Earnings from Discontinued Operations, net of taxes   --    --    n/m 
                
Net Earnings  $2,100   $1,232    70.4 
                
Earnings from Continuing Operations, excluding               
Specified Items, as described below  $2,518   $1,760    43.1 2)
                
Diluted Earnings per Common Share from:               
Continuing Operations  $1.17   $0.69    69.6 
Discontinued Operations   --    --    n/m 
Total  $1.17   $0.69    69.6 
                
Diluted Earnings per Common Share from Continuing               
Operations, excluding Specified Items, as described below  $1.40   $0.98     42.9 2)
                
Average Number of Common Shares Outstanding               
Plus Dilutive Common Stock Options   1,789    1,788      

 

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.

 

9

 

 

1)2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $20 million in excess tax benefits associated with share-based compensation.

 

2)2021 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $418 million, or $0.23 per share, for intangible amortization and other expenses primarily associated with restructuring actions and acquisitions, partially offset by a change in estimate to the restructuring actions recognized in the second quarter related to Abbott's manufacturing network for COVID-19 diagnostic tests to reflect current and projected demand.

 

2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $528 million, or $0.29 per share, for intangible amortization and impairment expenses and other net expenses primarily associated with acquisitions, restructuring actions and income from a litigation settlement.

 

10

 

 

Abbott Laboratories and Subsidiaries

Condensed Consolidated Statement of Earnings

Nine Months Ended September 30, 2021 and 2020

(in millions, except per share data)

(unaudited)

 

    9M21    9M20   % Change  
Net Sales  $31,607   $23,907   32.2  
                
Cost of products sold, excluding amortization expense   13,771    10,510   31.0  
Amortization of intangible assets   1,533    1,624   (5.7)  
Research and development   1,980    1,722   15.0  
Selling, general, and administrative   8,276    7,126   16.1  
Total Operating Cost and Expenses   25,560    20,982   21.8  
                
Operating Earnings   6,047    2,925   106.7  
                
Interest expense, net   370    373   (0.7)  
Net foreign exchange (gain) loss   7    (3)  n/m  
Other (income) expense, net   (214)   (25)  n/m  
Earnings from Continuing Operations before taxes   5,884    2,580   128.0  
                
Tax expense on Earnings from Continuing Operations   802    267   n/m 1)
Earnings from Continuing Operations   5,082    2,313   119.7  
                
Earnings from Discontinued Operations, net of taxes   --    20   n/m  
                
Net Earnings  $5,082   $2,333   117.8  
                
Earnings from Continuing Operations, excluding               
Specified Items, as described below  $7,001   $3,940   77.7 2)
                
Diluted Earnings per Common Share from:               
Continuing Operations  $2.83   $1.29   119.4  
Discontinued Operations   --    0.01   n/m  
Total  $2.83   $1.30   117.7  
                
Diluted Earnings per Common Share from Continuing               
Operations, excluding Specified Items, as described below  $3.89   $2.20   76.8 2)
                
Average Number of Common Shares Outstanding               
Plus Dilutive Common Stock Options   1,791    1,785      

 

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.

 

11

 

 

 

1)2021 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $97 million in excess tax benefits associated with share-based compensation.

 

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 $87 million in excess tax benefits associated with share-based compensation.

 

2)2021 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.919 billion, or $1.06 per share, for intangible amortization and other net expenses primarily associated with restructuring actions, certain litigation and acquisitions.

 

2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.627 billion, or $0.91 per share, for intangible amortization expense, impairment charges and other net expense primarily associated with acquisitions, restructuring actions and income from a litigation settlement.

 

12

 

 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Third Quarter Ended September 30, 2021 and 2020

(in millions, except per share data)

(unaudited)

 

   3Q21 
   As
Reported
(GAAP)		   Specified
Items		   As
Adjusted		   % to
Sales		 
Intangible Amortization  $520   $(520)  $--      
Gross Margin   5,985    445    6,430    58.8%
R&D   672    (21)   651    6.0%
SG&A   2,767    (30)   2,737    25.0%
Other (income) expense, net   (74)   7    (67)     
Earnings from Continuing Operations before taxes   2,493    489    2,982      
Tax expense on Earnings from Continuing Operations   393    71    464      
Earnings from Continuing Operations   2,100    418    2,518      
Diluted Earnings per Share from Continuing Operations  $1.17   $0.23   $1.40      

 

Specified items reflect intangible amortization expense of $520 million and net pretax income of $31 million, primarily associated with a change in estimate to the restructuring actions recognized in the second quarter, partially offset by costs associated with acquisitions and other expenses. See page 16 for additional details regarding specified items.

 

   3Q20 
   As
Reported
(GAAP)		   Specified
Items		   As
Adjusted		   % to
Sales		 
Intangible Amortization  $510   $(510)  $--      
Gross Margin   4,377    705    5,082    57.4%
R&D   580    (21)   559    6.3%
SG&A   2,302    63    2,365    26.7%
Other (income) expense, net   (46)   (1)   (47)     
Earnings from Continuing Operations before taxes   1,421    664    2,085      
Tax expense on Earnings from Continuing Operations   189    136    325      
Earnings from Continuing Operations   1,232    528    1,760      
Diluted Earnings per Share from Continuing Operations  $0.69   $0.29   $0.98      

 

Specified items reflect intangible amortization expense of $510 million and other net expenses of $154 million, primarily associated with acquisitions, restructuring actions and other expenses and litigation settlement income. See page 17 for additional details regarding specified items.

 

13

 

 

 

Abbott Laboratories and Subsidiaries

Non-GAAP Reconciliation of Financial Information From Continuing Operations

Nine Months Ended September 30, 2021 and 2020

(in millions, except per share data)

(unaudited)

 

    9M21
    As
Reported (GAAP)		    Specified
Items		    As
Adjusted		    % to
Sales		 
Intangible Amortization  $1,533   $(1,533)  $--      
Gross Margin   16,303    2,042    18,345    58.0%
R&D   1,980    (67)   1,913    6.1%
SG&A   8,276    (274)   8,002    25.3%
Other (income) expense, net   (214)   30    (184)     
Earnings from Continuing Operations before taxes   5,884    2,353    8,237      
Tax expense on Earnings from Continuing Operations   802    434    1,236      
Earnings from Continuing Operations   5,082    1,919    7,001      
Diluted Earnings per Share from Continuing Operations  $2.83   $1.06   $3.89      

 

Specified items reflect intangible amortization expense of $1.533 billion and other net expenses of $820 million, primarily associated with restructuring actions, certain litigation, acquisitions and other expenses. See page 18 for additional details regarding specified items.

 

    9M20
    As
Reported (GAAP)		    Specified
Items		    As
Adjusted		    % to
Sales		 
Intangible Amortization  $1,624   $(1,624)  $--      
Gross Margin   11,773    1,895    13,668    57.2%
R&D   1,722    (64)   1,658    6.9%
SG&A   7,126    (19)   7,107    29.7%
Other (income) expense, net   (25)   (111)   (136)     
Earnings from Continuing Operations before taxes   2,580    2,089    4,669      
Tax expense on Earnings from Continuing Operations   267    462    729      
Earnings from Continuing Operations   2,313    1,627    3,940      
Diluted Earnings per Share from Continuing Operations  $1.29   $0.91   $2.20      

 

Specified items reflect intangible amortization expense of $1.624 billion and other net expenses of $465 million, primarily associated with acquisitions, restructuring actions and other expenses and litigation settlement income. See page 19 for additional details regarding specified items.

 

14

 

 

A reconciliation of the third-quarter tax rates for continuing operations for 2021 and 2020 is shown below:

 

    3Q21          
($ in millions)   Pre-Tax Income    Taxes on
Earnings		    Tax
Rate		         
As reported (GAAP)  $2,493   $393    15.7%        
Specified items   489    71              
Excluding specified items  $2,982   $464    15.5%        

 

    3Q20      
($ in millions)   Pre-Tax Income    Taxes on Earnings    Tax
Rate		      
As reported (GAAP)  $1,421   $189    13.3%   1)
Specified items   664    136           
Excluding specified items  $2,085   $325    15.6%     

 

1)2020 Tax expense on Earnings from Continuing Operations includes the recognition of 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 2021 and 2020 is shown below:

 

    9M21      
($ in millions)   Pre-Tax Income    Taxes on Earnings    Tax
Rate		      
As reported (GAAP)  $5,884   $802    13.6%   2)
Specified items   2,353    434           
Excluding specified items  $8,237   $1,236    15.0%     
                     

 

    9M20       
($ in millions)   Pre-Tax Income    Taxes on Earnings    Tax
Rate		       
As reported (GAAP)  $2,580   $267    10.4%    3)
Specified items   2,089    462            
Excluding specified items  $4,669   $729    15.6%      

 

2)2021 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $97 million in excess tax benefits associated with share-based compensation.

 

3)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 $87 million in excess tax benefits associated with share-based compensation.

 

15

 

 

Abbott Laboratories and Subsidiaries 

Details of Specified Items

Third Quarter Ended September 30, 2021

(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  $16   $(96)  $520   $5   $445 
R&D   (4)   --    --    (17)   (21)
SG&A   (12)   (23)   --    5    (30)
Other (income) expense, net   6    --    --    1    7 
Earnings from Continuing Operations before taxes  $26   $(73)  $520   $16    489 
Tax expense on Earnings from Continuing Operations (d)                       71 
Earnings from Continuing Operations                      $418 
Diluted Earnings per Share from Continuing Operations                      $0.23 

 

 

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. 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. The Gross Margin amount includes a credit associated with a change in estimate to the charges taken in the second quarter for a restructuring plan related to Abbott's manufacturing network for COVID-19 diagnostic tests to reflect current and projected demand.

 

c)Other includes incremental costs to comply with the European Union's Medical Device (MDR) and In Vitro Diagnostics Medical Device (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.

 

16

 

 

 

Abbott Laboratories and Subsidiaries 

Details of Specified Items 

Third Quarter Ended September 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  $             16   $        27   $         510   $        152   $       705 
R&D   (1)   (1)   --    (19)   (21)
SG&A   (28)   (9)   --    100    63 
Other (income) expense, net   (2)   --    --    1    (1)
Earnings from Continuing Operations before taxes  $47   $37   $510   $70    664 
Tax expense on Earnings from Continuing Operations (d)                       136 
Earnings from Continuing Operations                      $528 
Diluted Earnings per Share from Continuing Operations                      $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 retention 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 an intangible asset and the costs to acquire R&D assets, partially offset by income from the settlement of litigation.

 

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.

  

17

 

 

Abbott Laboratories and Subsidiaries 

Details of Specified Items 

Nine Months Ended September 30, 2021 

(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  $             56   $           433   $           1,533   $          20   $          2,042 
R&D   (9)   1    --    (59)   (67)
SG&A   (43)   (22)   --    (209)   (274)
Other (income) expense, net   3    1    --    26    30 
Earnings from Continuing Operations before taxes  $105   $453   $1,533   $262    2,353 
Tax expense on Earnings from Continuing Operations (d)                       434 
Earnings from Continuing Operations                      $1,919 
Diluted Earnings per Share from Continuing Operations                      $1.06 

 

 

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. 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. The Gross Margin amount includes charges associated with a restructuring plan to align Abbott's manufacturing network for COVID-19 diagnostic tests with changes during the year in current and projected testing demand.

 

c)Other primarily relates to the costs related to certain litigation, the acquisition of a research and development asset, the impairments of an equity investment and an intangible asset, and the gain on the disposition of an equity method investment.

 

d)Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

 

18

 

 

Abbott Laboratories and Subsidiaries 

Details of Specified Items 

Nine Months Ended September 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  $             61   $          57   $          1,624   $       153   $    1,895 
R&D   (8)   (9)   --    (47)   (64)
SG&A   (83)   (36)   --    100    (19)
Other (income) expense, net   (3)   --    --    (108)   (111)
Earnings from Continuing Operations before taxes  $155   $102   $1,624   $208    2,089 
Tax expense on Earnings from Continuing Operations (d)                       462 
Earnings from Continuing Operations                      $1,627 
Diluted Earnings per Share from Continuing Operations                      $0.91 

 

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 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 impairment charges related to certain assets and the costs to acquire R&D assets, partially offset by income from the settlement of litigation.

 

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.

 

# # #

 

19