ABBOTT LABORATORIES Q4 FY2024 earnings call

• Gratitude to Abbott colleagues for continued success. 2024 performance included 9.5% sales growth (excluding COVID testing), 70bps gross margin improvement, $8.5B operating cash flow, $5B returned to shareholders. Q4 sales grew 10% (excluding COVID testing), adjusted EPS up 13%. For 2025, well-positioned for strong growth with organic sales growth 7.5%-8.5% and adjusted EPS $5.05-$5.25. Pipeline provides new growth opportunities. Segment performances detailed as above, with each segment showing strong growth in respective areas.

Nutrition

• Sales increased 7% in the quarter. Double-digit growth in adult nutrition led by Ensure and Glucerna brands. Annual sales of Ensure surpassed $3 billion, and adult nutrition products grew 9% annually with a 5-year CAGR of 9%.

Diagnostics

• Sales increased 6% excluding COVID testing sales. Rapid diagnostics saw excluded COVID testing sales up 16% driven by respiratory disease tests. Core Laboratory Diagnostics grew 4% due to strong demand for immunoassay, clinical chemistry, etc. Excluding challenging China market dynamics, other markets grew double digits in Q4.

EPD

• Sales increased 8.5% in the quarter. Well-balanced growth across markets and therapeutic areas, including gastroenterology, women's health, etc. 5-year CAGR for EPD is 8%.

Medical Devices

• Sales grew 14%. Diabetes Care: CGM sales $1.8B in Q4, $6.5B full year 2024, up 22% (27% US growth). Electrophysiology: 9% growth, impacted by prior year comparison but would have been double digits. Structural Heart: 23% growth (surgical valves, etc.). Rhythm Management: 7% growth (AVEIR, Assert). Heart Failure: 9.5% growth. Vascular: 7% growth (vessel closure, Esprit). Neuromodulation: 8% growth.

• Forecasts 2025 organic sales growth in range of 7.5% to 8.5%.
• Adjusted earnings per share forecasted to be in range of $5.05 to $5.25. First quarter adjusted EPS forecast $1.05 to $1.09.
• Expected unfavorable FX impact of around 2.5% on full year reported sales, ~3.5% on first quarter reported sales.
• Full year 2025 adjusted gross margin profile expected to be around 57% of sales (80bps improvement vs prior year).
• Adjusted operating margin profile forecasted to be 23.5% to 24% of sales (150bps improvement vs prior year).
• Adjusted tax rate forecasted to be 16% to 17% (increase due to Pillar 2 tax framework).

• Economic, competitive, governmental, technological, and other factors that may affect operations.
• VBP dynamics in China affecting diagnostics business.
• Transient competition in Electrophysiology business.
• FX impact on sales and earnings.

Q: Robbie Marcus from JPMorgan asked about 2025 guide, growth drivers, and operating margin expansion.

A: Robert Ford discussed 2025 being free of COVID sales decline, strong growth drivers across segments, top line growth, and margin expansion from gross margin improvement and spending leverage.

Q: Larry Biegelsen from Wells Fargo asked about CGM growth, Libre 3 supply, and Lingo launch.

A: Robert Ford talked about Libre 3 supply issues being resolved with new manufacturing sites, Libre 3 performing well, and growth drivers including intensive insulin segment and accelerators like basal coverage, connectivity strategies, and Lingo launch.

Q: Travis Steed from BofA Securities asked about EP growth.

A: Robert Ford discussed EP growth being strong, outperforming expectations, team execution, and confidence in maintaining position with pipeline and KOL engagement.

Q: Vijay Kumar from Evercore ISI asked about margin sustainability and balance sheet/M&A.

A: Phil Boudreau discussed gross margin improvement sustainability due to normalized inflation, and Robert Ford talked about balanced approach to balance sheet, selective M&A, and ROIC focus.

Q: Josh Jennings from TD Cowen asked about margin expansion opportunities.

A: Robert Ford discussed margin expansion opportunities in Nutrition, Pharmaceuticals, and MedTech, with commitment to continue improving gross margins and achieving pre-pandemic levels.

Q: David Roman from Goldman Sachs asked about Structural Heart business and growth context.

A: Robert Ford discussed Structural Heart portfolio growth, diversified and competitive products, and continued investments with pipeline progress.

Q: Joanne Wuensch from Citi asked about MedTech market health.

A: Robert Ford discussed MedTech market health driven by utilization growth from demographics and innovation, stable pricing, and increased diagnostic test utilization.

Q: Danielle Antalffy from UBS asked about elevating legacy business growth.

A: Robert Ford discussed strategies to elevate Vascular and CRM businesses through innovation, execution, and portfolio/pipeline improvements.

Q: Matt Miksic from Barclays asked about tax policy impact.

A: Phil Boudreau discussed tax guidance reflecting current laws and geographic mix, and Robert Ford discussed tax as an expense, managing it within business operations, and importance of US companies' role in economy.