Solid sales of insertable heart monitors and insulin pumps helped propel Abbott Laboratories to Wall Street-beating sales and adjusted earnings during the first quarter, as the company reaffirmed expectations to grow earnings by about 14 percent this year.
The Illinois-based maker of medical devices and baby formula reported adjusted earnings of 59 cents per share, a penny better than consensus estimates of analysts. Its $7.39 billion in total revenue, nearly 17 percent above year-ago levels, also topped estimates. Organic sales increased 6.9 percent.
"As expected, the momentum we carried into the new year has continued," Abbott Chief Executive Miles White told investors during a conference call Wednesday.
Abbott's share price tumbled nearly 3 percent in early trading Wednesday before recovering. Analysts with Leerink Partners noted that many investors had expected slightly better organic growth than was announced Wednesday, "which may limit upside to the shares today despite an otherwise very good quarter."
Abbott quickly expanded its line of current and future medical devices in January 2017 when it paid roughly $25 billion to acquire longtime Little Canada device maker St. Jude Medical, which sold a wide range of products from pacemakers to neurostimulators to heart monitors. Medical devices now account for about 37 percent of Abbott sales. (The company plans to focus on debt reduction this year, not more acquisitions, White said Wednesday.)
The acquisition helped propel Abbott to the No. 1 U.S. sales position for spinal-cord stimulation devices to treat chronic pain, analysts noted Wednesday. Abbott had $212 million in sales of neuromodulation devices, which represented nearly 19 percent organic growth. White predicted the business would build consistently over time, but not necessarily "spike."
Strong sales of the St. Jude-designed Confirm Rx Insertable Cardiac Monitor helped propel organic revenue growth in the electrophysiology division of nearly 19 percent, to $391 million in worldwide sales.
"There is competition out there. There's competition in every category that we're in," White said. "I suspect that we'll see a response to the success of this product, but so far, we are doing really well."
Abbott launched the minimally invasive device commercially in the U.S. in August. The company said the Confirm Rx is the only smartphone-compatible insertable cardiac monitor designed to help doctors and patients remotely identify abnormal heart rhythms. If abnormalities are detected, patients may end up getting higher-priced heart devices, like implantable defibrillators.
Traditional St. Jude heart devices like pacemakers and defibrillators reported flat sales of $535 million in the quarter, as slow growth in the U.S. was counteracted by declines internationally. White said that while sales of new devices overall were solid, the expected cycle of device replacements was disrupted by St. Jude's disclosure of a problem with some device batteries in 2016.
Abbott's medical device business received a significant lift from sales of the FreeStyle Libre sensor-based continuous glucose monitoring system, which the company said removes the need for finger sticks for people with diabetes. The fast-growing diabetes business had sales of $421 million in the quarter, representing 33 percent organic growth.
About 650,000 people globally are using the device today, and that number is expected to hit 1 million this year. White said the company is adding about 50,000 new users a month, and much of the growth has been driven by social media and word of mouth, keeping the cost of sales down. About one-third of Libre users have the insulin-intensive type 1 form of diabetes.
For the full year of 2018, Abbott confirmed its guidance range of $2.80 to $2.90 in earnings per share on an adjusted diluted basis for continuing operations. That compares to $2.50 that it realized last year. For the second quarter, Abbott announced diluted adjusted EPS guidance of 70 cents to 72 cents.
Shares closed at $59.52, down 28 cents or less than 1 percent.
Joe Carlson • 612-673-4779
