Abbott Reports Double-Digit Ongoing Earnings-Per-Share Growth in Fourth Quarter and Full-Year 2011
-- On Track to Separate into Two Leading Health Care Companies --
Abbott (NYSE: ABT) today announced financial results for the fourth quarter ended Dec. 31, 2011.
"Despite another challenging year for the global economy, Abbott again delivered leading performance, including strong sales and ongoing earnings-per-share growth," said Miles D. White, chairman and chief executive officer, Abbott. "2011 was a significant year for Abbott, with the announced plan to separate into two leading health care companies in research-based pharmaceuticals and diversified medical products, each offering shareholders distinct identities with unique investment opportunities. We remain on track to complete the separation by the end of 2012."
The following is a summary of fourth-quarter 2011 sales by major business category.
The following is a summary of twelve-month 2011 sales by major business category.
The following is a summary of fourth-quarter 2011 sales for select products.
The following is a summary of twelve-month 2011 sales for select products.
Business Highlights
Announced Plans to Separate Abbott into Two Leading Health Care Companies
Announced plans to separate into two publicly-traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The diversified medical products company will consist of Abbott's branded generic pharmaceutical, devices, diagnostic and nutritional businesses, and will retain the Abbott name. The research-based pharmaceutical company will include Abbott's current portfolio of proprietary pharmaceuticals and biologics and will be named later.
Received U.S. Approval for XIENCE PRIME Drug Eluting Stent
Received U.S. Food and Drug Administration (FDA) approval for XIENCE PRIME™ for the treatment of coronary artery disease. Abbott now offers an expanded range of drug eluting stents, including long lengths up to 38 mm. XIENCE PRIME features an enhanced stent design and delivery system.
Announced Expanded Collaboration with Reata Pharmaceuticals
Announced plans to jointly develop and commercialize Reata's portfolio of second-generation oral antioxidant inflammation modulators (AIMs). The collaboration includes molecules in a broad range of therapeutic areas, including pulmonary, central nervous system disorders and immunology.
Presented Promising New Data on HCV Compounds
Presented interim results from two Phase 2 studies in Hepatitis C (HCV) patients treated with Abbott's ritonavir-boosted protease inhibitor ABT-450, a polymerase inhibitor and ribavirin for 12 weeks. Early results show very high cure rates were achieved in genotype 1a and 1b patients with only 12 weeks of interferon-free therapy. In addition, we initiated a Phase 2b interferon-free combination study.
Presented New Daclizumab Data at Multiple Sclerosis Congress
Announced with our partner company Biogen Idec additional results from the SELECT Phase 2b trial, the first of two registrational studies designed to evaluate daclizumab high-yield process (DAC HYP) in people with relapsing-remitting multiple sclerosis. Results showed that DAC HYP met the trial's primary endpoint by significantly reducing the annualized relapse rate by 54 percent in the 150 mg dose group and 50 percent in the 300 mg dose group compared to the placebo group at one year.
Secured FDA Clearance for Acute Myeloid Leukemia Test
Received 510(k) clearance from the U.S. FDA for a new in vitro diagnostic test to aid in determining the prognosis of patients with acute myeloid leukemia (AML). Abbott's Vysis EGR1 FISH Probe Kit is the third Abbott FISH assay approved or cleared this year by the FDA for oncology applications.
Launched New Line of Glucerna Nutrition Products for People with Diabetes
Introduced new Glucerna® Hunger Smart™ nutrition shakes and bars for the more than 25 million Americans with diabetes.
Expanded Use of ARCHITECT Platform with Additional Assay Approvals
Received approval in the European Union to market a new diagnostic test for detection of hepatitis B surface antigen (HBsAg), performed on Abbott's ARCHITECT® laboratory testing platform. Additionally, Abbott received clearance from the U.S. FDA for a fully-automated 25-OH Vitamin D assay.
Initiated Clinical Trials to Evaluate Drug Eluting BVS
Announced the initiation of the ABSORB II trial to evaluate the safety, efficacy and performance of the Absorb™ bioresorbable vascular scaffold (BVS) compared to XIENCE PRIME. Absorb has CE Mark and is authorized for sale in
Europe for the treatment of coronary artery disease. Additionally, we initiated a first-of-its-kind clinical trial in
Europe evaluating our novel Esprit™ drug-eluting BVS in patients with peripheral artery disease.
Abbott issues ongoing earnings-per-share outlook for 2012
Abbott is issuing ongoing earnings-per-share guidance for the full-year 2012 of $4.95 to $5.05, reflecting another year of strong performance.
Abbott forecasts specified items for the full-year 2012 of approximately $0.35 per share, primarily associated with acquisition integration and cost reduction initiatives. This forecast of specified items excludes one-time costs related to the planned separation of Abbott into two companies, which will be quantified at a later date. Including these specified items, projected earnings per share under Generally Accepted Accounting Principles (GAAP) would be $4.60 to $4.70 for the full-year 2012.
Abbott declares 352nd quarterly dividend
On Dec. 9, 2011, the board of directors of Abbott declared the company's quarterly common dividend of 48 cents per share. The cash dividend is payable Feb. 15, 2012, to shareholders of record at the close of business on Jan. 13, 2012. This marks the 352nd consecutive dividend paid by Abbott since 1924.
About Abbott
Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs approximately 91,000 people and markets its products in more than 130 countries.
Abbott's news releases and other information are available on the company's Web site at http://www.abbott.com. Abbott will webcast its live fourth-quarter earnings conference call through its Investor Relations Web site at http://www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time.
- Private Securities Litigation Reform Act of 1995 -
A Caution Concerning Forward-Looking Statements
Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995, including the planned separation of the research-based pharmaceutical company from the diversified medical products company and the expected financial results of the two companies after the separation. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors," to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2010, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.
Questions & Answers
Q1) What drove sales growth in the quarter?
A1) Worldwide sales increased 4.1 percent to $10.4 billion in the quarter, including a favorable 0.2 percent effect of foreign exchange. With the significant movements in a number of exchange rates during the quarter, the favorable impact from exchange was almost 1 percent lower than our previous forecast.
Worldwide Nutritionals sales increased 8.6 percent in the quarter. International Nutritionals increased 10.8 percent, including 0.3 percent from favorable foreign exchange and driven by continued strong growth in emerging markets. U.S. Nutritionals increased 5.8 percent, with continued double-digit growth in PediaSure® and Ensure®. We also saw steady growth in International Vascular, Diabetes Care, Point of Care Diagnostics and Core Laboratory Diagnostics with continued ARCHITECT system placements. Molecular Diagnostics sales increased double-digits with the launch of new tests and uptake of the Ibis PLEX-ID platform.
Proprietary Pharmaceuticals sales increased 6.7 percent, including 0.4 percent from favorable foreign exchange, driven by strong growth across a number of key franchises in the United States and internationally including HUMIRA®, Androgel®, Creon®, Lupron® and Synthroid®.
Emerging markets sales were $2.5 billion, representing nearly 25 percent of total sales, with particularly strong growth in Nutritionals, Vascular and Diagnostics. In our Established Pharmaceuticals business, we had strong performance in Russia, India and China. In Nutritionals, we saw particularly strong growth in Asia and Latin America, where we are expanding our presence and gaining share with the introduction of new products. In our Vascular business, we had strong growth across many of our key emerging markets, driven by procedure volume and Abbott market share gains. And, in our Diagnostics business, we continue to perform well in Russia and China, where we are placing new ARCHITECT systems and continuing to penetrate the market.
Q2) What is the update on Abbott's planned separation into two leading health care companies?
A2) In October 2011, Abbott announced plans to separate into two publicly traded companies, one in diversified medical products and the other in research-based pharmaceuticals. The diversified medical products company will consist of Abbott's branded generic pharmaceutical, devices, diagnostic and nutritional businesses, and will retain the Abbott name. The research-based pharmaceutical company will include Abbott's current portfolio of proprietary pharmaceuticals and biologics and will be named later.
The transaction is intended to take the form of a tax-free distribution to Abbott shareholders of a new publicly traded stock for the new pharmaceutical company. The expected stock distribution ratio will be determined at a future date. It is expected that the two companies will each pay a dividend that, when combined, will equal the current Abbott dividend at the time of separation.
The separation process is being led by a dedicated team. We continue to expect the separation to be completed by the end of this year.
Q3) What was the gross margin ratio in the quarter?
A3) The gross margin ratio before and after specified items is shown below (dollars in millions):
The adjusted gross margin ratio was 63.8 percent in the fourth quarter, an increase of 320 basis points over the fourth-quarter 2010. This was above our previous outlook for the quarter and driven by efficiency initiatives, favorable product mix, and the effect of foreign exchange.
Q4) What drove ongoing SG&A and R&D investment?
A4) Both ongoing SG&A and R&D investment reflect Abbott's continued investment in programs to drive future growth. Ongoing R&D expense as a percentage of sales was 10.2 percent, reflecting continued investment in Abbott's broad-based pipeline, including programs in vascular devices, diagnostics, nutritionals, immunology, neuroscience, oncology and HCV.
Q5) What was the tax rate?
A5) The ongoing tax rate this quarter was 14.6 percent, in line with expectations.
Q6) How did specified items affect reported results?
A6) Specified items impacted fourth-quarter results as follows:
Acquired in-process research and development is related to the agreement with Reata Pharmaceuticals to jointly develop and commercialize Reata's portfolio of second generation oral antioxidant inflammation modulators (AIMs).
Restructuring/integration/other is associated with restructuring and integration costs for the Solvay Pharmaceuticals acquisition. This item also includes previously announced cost reduction initiatives to improve efficiencies in the pharmaceutical, vascular, and core laboratory diagnostics businesses, along with certain new efficiency programs.
The impact of specified items by Consolidated Statement of Earnings line item is as follows (dollars in millions):
Q7) What are the key areas of focus in Abbott's broad-based pipeline?
A7) We continue to advance our broad-based pipeline. In 2011, we launched several new products or indications, including XIENCE PRIME, XIENCE nano™, TREK® Coronary Balloon System, the RX Herculink Elite Renal Stent System, our ALK gene molecular diagnostics test, the FreeStyle® InsuLinx Blood Glucose Monitoring System, Glucerna Hunger Smart shakes and bars, Androgel 1.62%, Creon infant-specific dosage and three new variations of Lupron Depot. We also advanced elotuzumab and bardoxolone into Phase 3 development, and we now have more than 20 compounds or new indications in Phase 2 or Phase 3 development.
Following are highlights from breakthrough research across our pharmaceuticals, medical products and nutritionals pipelines:
