Abbott Alinity Sales up as Normal Hospital Purchasing Patterns Return; Dx Q1 Revs Down 49 Percent

NEW YORK — As the COVID-19 pandemic continues to wane, Abbott is seeing hospital systems return to more traditional patterns of core laboratory equipment purchasing, CEO Robert Ford said Wednesday during a conference call following the release of the company's Q1 results.

Discussing placements of the firm's Alinity systems for immunoassay, clinical chemistry, point of care, hematology, blood and plasma screening, and molecular diagnostics, Ford noted that during much of the pandemic, hospitals had paused purchasing of new laboratory systems as they devoted their energies to handling the influx of COVID-19 patients. He said that beginning in the second half of 2022 and continuing into Q1 2023, Abbott had seen these customers restart vendor bidding processes with that resumption reflected in the company's core lab business, which posted a 7 percent year-over-year rise in organic revenues.

"I think we are restarting that process and reaccelerating it. We saw good growth in the US and good growth in Europe," Ford said, adding that this was partially offset by softness in the Chinese market. He said the company was targeting a growth rate of around 7 to 9 percent for its Alinity business.

"I would say that we could probably grow faster than that, but it would come at some margin erosion because you are going to have to place a lot of boxes to be able to get to that double-digit growth," he said.

More broadly, Abbott saw a larger than expected drop in COVID-19 revenues countered by a stronger than expected performance in its base business, which prompted it to cut its full year forecast for COVID-19-related sales from roughly $2.00 billion to around $1.50 billion but leave its full-year adjusted earnings per share guidance of $4.30 to $4.50 unchanged.

For the three months ended March 31, Abbott reported overall Q1 revenues of $9.75 billion, down 18 percent from $11.90 billion in Q1 2021 and beating analysts' average estimate of $9.64 billion.

On an organic basis, revenues fell 15 percent year over year, the Abbott Park, Illinois-based firm said.

The firm reported its Diagnostics segment revenues fell 49 percent to $2.69 billion from $5.26 billion a year ago on sharply lower COVID-19-related sales. Within Diagnostics, core laboratory revenues were essentially flat year over year at $1.18 billion. Meanwhile, its molecular diagnostics revenues fell 65 percent to $147 million from $420 million in Q1 2022. Point-of-care revenues were up 5 percent to $134 million from $128 million, and rapid diagnostic revenues fell 65 percent to $1.23 billion from $3.53 billion.

Both core laboratory and molecular diagnostics revenues were impacted by year-over-year declines in COVID-19 testing-related sales, the firm said.

COVID-19 testing sales were $730 million for the quarter, down 78 percent from $3.30 billion in Q1 2022.

Excluding COVID-19 testing-related sales, Abbott's Diagnostics segment posted organic revenue growth of 4 percent, with organic core laboratory revenues increasing 7 percent year over year, organic molecular diagnostics revenues decreasing 25 percent, organic point-of-care revenues increasing 6 percent, and organic rapid diagnostics revenues increasing 8 percent.

In other business segments, Abbott's Q1 Nutrition revenues rose 4 percent to $1.97 billion from $1.89 billion; Established Pharmaceuticals revenues increased 4 percent to $1.19 billion from $1.15 billion; and Medical Devices revenues rose 9 percent to $3.90 billion from $3.57 billion.

Abbott reported net earnings of $1.32 billion, or $.75 per share, in Q1 compared to $2.45 billion, or $1.37 per share, in the year-ago period. Adjusted EPS was $1.03, beating the analysts' consensus estimate of $.99.

The firm spent $654 million on R&D in Q1, down 6 percent from $697 million in Q1 2022, and logged $2.76 billion in SG&A expenses, down 1 percent from $2.79 billion in the prior-year quarter.

Abbott is projecting full-year 2023 EPS from continuing operations of between $3.05 and $3.25. As noted above, adjusted EPS from continuing operations for the year is anticipated to be between $4.30 and $4.50.

Also, this week the US Food and Drug Administration posted a warning letter issued to Abbott Point of Care Canada in November 2022 saying that an FDA inspection of the firm's Ottawa, Canada, manufacturing facility in May 2022 found that its i-STAT cTnI Test for measurement of cardiac troponin I in whole blood or plasma was not in compliance with FDA regulations. The agency said the company did not have an approved application for premarket approval or an approved application for an investigational device exemption for the device and added that the device was misbranded. Additionally, the FDA said the inspection found that the methods used for the devices' "manufacture, packing, storage, or installation are not in conformity with the current good manufacturing practice requirements."

The agency said it would verify that the company had made corrective actions at its next inspection.

In Wednesday morning trading on the New York Stock Exchange, shares of Abbott were up 5 percent to $109.11.