Strong sales of medical devices for the heart and blood sugar led the way to 8 percent companywide organic sales growth in the third quarter for Abbott Laboratories, meeting Wall Street expectations for the diverse health care products company.
Medical devices, including many developed in Minnesota, make up Abbott's largest single business group following the acquisition of Minnesota's St. Jude Medical in 2017. During the quarter, Abbott promoted Robert B. Ford, who led the integration of St. Jude into Abbott, to a new role as chief operating officer of the Illinois-based company.
Abbott's device sales grew 10 percent organically in the quarter to $2.8 billion, driven by growth in insertable heart monitors and minimally invasive devices to repair structural defects in the heart. Abbott's fastest-growing med-tech category was diabetes therapies, a longtime Abbott franchise.
Across all divisions, Abbott had a profitable quarter, posting 75 cents of diluted adjusted earnings per share from continuing operations _ an increase of 11 cents over the same quarter last year, meeting earnings forecasts.
Excluding debt amortization and restricting expenses, Abbott recorded net earnings from continuing operations of $1.3 billion on $7.7 billion in sales during the third quarter. Companywide sales were up 12 percent, while adjusted diluted EPS grew by nearly 14 percent.
Abbott stock was trading around $69.53 in morning trading, off about 2 percent from their Tuesday close.
"This quarter came in pretty much as we expected. However, we observed that investor sentiment was running high going into this quarter's results, so we think some may look at these results and guidance as mildly disappointing," Edward Jones analyst John Boylan wrote to investors Wednesday morning. "We continue to believe Abbott's shares are attractively valued."
Analysts with Leerink Partners noted that Abbott's 8 percent companywide organic sales growth, which omits acquisitions, was the company's second-highest quarter of organic growth since 2015, despite what the analysts called "normal seasonality" in sales. "However, expectations are already elevated coming off three consecutive quarters of high-single-digit organic growth ... We believe ABT has delivered (this year so far), despite the fact that this quarter might not have met increasingly high expectations."
CEO Miles White said that the staff at St. Jude Medical had talked up the growth potential of many of their earlier-stage products before the company was acquired by Abbott. Looking back after seven quarters, Miles said, "frankly, they were right."
"The new product cadence coming out of medical devices is really good, and frankly we expect another approval imminently here in the U.S. (for the HeartMate 3 heart pump,)" White told investors in a conference call Wednesday. "In terms of the stability of the top line, we feel good about that. I feel very good about the underlying strength of the company."
All told, Abbott sold $2.8 billion worth of medical devices in the third quarter, including $400 million worth of electrophysiology products like heart monitors, $305 million worth of structural heart products like the MitraClip device for mitral valve repair, and $512 million worth of blood-sugar devices including the popular Freestyle Libre continuous glucose monitor. Diabetes sales grew particularly fast, up 40 percent vs. the same quarter last year.
Sales of heart-rhythm devices like pacemakers and vascular products like stents were flat overall compared to last year, while sales of devices to treat heart failure fell by 9 percent.
Abbott also narrowed its earnings forecast for the year.
Under revised projections, Abbott is now expecting to achieve adjusted diluted earnings of between $2.87 and $2.89 per share from continuing operations. (The prior guidance range was $2.85 to $2.91.)
