Dive Brief:
- Abbott Laboratories on Wednesday reported third-quarter sales of $10.9 billion, a 22.4% increase on an organic basis from a year ago, driven by a surge in demand for COVID-19 tests and strength in its base business beating Wall Street consensus estimate of $9.54 billion.
- CEO Robert Ford told investors on Wednesday's earnings call that demand for rapid tests rose significantly, particularly in the U.S. as the delta variant spread. Global diagnostics sales in the quarter jumped 46.8% on an organic basis with $1.9 billion in coronavirus-related testing sales. Excluding COVID-19 testing, diagnostics sales grew 12.5% on an organic basis, while medical devices sales increased 13.1% on an organic basis compared to last year.
- Looking to the fourth quarter, CFO Robert Funck said Abbott forecasts $1 billion to $1.4 billion in COVID-19 test sales. However, Ford warned that the coronavirus testing market remains volatile and it's going to be "very difficult" to forecast 2022. "We'll have to update on a rolling quarterly basis here how COVID's going to play out," Ford added.
Dive Insight:
Abbott in June cut its full-year outlook blaming global vaccination efforts for a sharp decline in demand for its COVID-19 diagnostics. However, the company's testing fortunes have rebounded as it sold more than 225 million coronavirus tests worldwide during the third quarter.
"Over the last several months, we've learned that COVID vaccines — while a powerful tool — are not the lone solution needed in our global fight against this virus," Ford told investors on Wednesday, arguing that rapid testing is a critical "companion" to vaccinations and therapeutics.
Diagnostics companies including Abbott and Quidel are scaling up production in an attempt to meet the surging demand for COVID-19 tests. Quidel earlier this month announced preliminary third-quarter results saying it expects total revenues to be between $505 million to $510 million, above Wall Street's $186 million, fueled by coronavirus-related test sales of about $406 million.
Jefferies analysts in a Wednesday note commented that elevated coronavirus-related testing is likely to persist into year-end for Abbott and that its $1.9 billion in third-quarter sales puts the company "on track to easily surpass the ~$400mn implied 4Q guide with elevated delta and flu season optionality as drivers."
Excluding COVID-19 testing sales, Abbott's total third-quarter sales grew 11.7% on an organic basis for the first nine months of 2021 compared to a 2019 pre-pandemic baseline.
"Strong growth in our more consumer-facing businesses — nutrition, established pharmaceuticals and diabetes care — mitigated the modest impacts we saw from the surges in certain areas of our hospital-based businesses," Ford said, adding "there was some softness" during the third quarter in August as delta cases increased in the U.S. but Ford "likes" what the company is seeing in terms of recovery.
Compared to pre-pandemic sales in 2019, Abbott's medical device sales increased 16.1% on an organic basis in the third quarter, with double-digit growth in diabetes care, electrophysiology, heart failure and structural heart. Abbott's Diabetes Care business saw FreeStyle Libre sales of $968 million in the third quarter, a 38.8% increase on an organic basis.
Evercore ISI analysts in a Wednesday note said Libre sales were consistent with expectations while MitraClip sales were "flattish" compared to the third quarter of 2020 raising questions around "pandemic impact" on structural heart. The analysts also noted "while core cardio did better, neuro declined."
Looking ahead, Ford said Abbott will give 2022 guidance in January, as the company typically does. "We're still in our process," the CEO told investors. "I want to see a little bit more in terms of how this pandemic is unfolding."
