Abbott Reports Third-Quarter 2021 Results; Achieves Strong Double-Digit Earnings Growth and Raises Guidance

Rhea-AI Summary

Abbott reported strong financial results for Q3 2021, with sales reaching $10.9 billion, a 23.4% increase year-over-year. GAAP diluted EPS was $1.17, while adjusted diluted EPS grew 42.9% to $1.40. The company projects full-year diluted EPS of $3.55 to $3.65 and adjusted EPS of $5.00 to $5.10, indicating potential 38.4% growth. Significant product launches and acquisitions contributed to this growth, including FDA approvals for new medical devices and an acquisition of Walk Vascular.

Positive

• Sales increased by 23.4% year-over-year to $10.9 billion in Q3.
• GAAP diluted EPS rose to $1.17, with adjusted EPS at $1.40, reflecting 42.9% growth.
• Full-year diluted EPS guidance of $3.55 to $3.65 and adjusted EPS of $5.00 to $5.10 projects 38.4% growth.
• Successful FDA approvals for several new medical devices, enhancing product offerings.
• Acquisition of Walk Vascular strengthens Abbott's medical device portfolio.

Negative

• Continued reliance on COVID-19 testing-related sales, which may decline as the pandemic stabilizes.

ABBOTT PARK, Ill., Oct. 20, 2021 /PRNewswire/ -- Abbott (NYSE: ABT) today announced financial results for the third quarter ended Sept. 30, 2021.

• Third-quarter sales of $10.9 billion increased 23.4 percent on a reported basis and 22.4 percent on an organic basis, which excludes the impact of foreign exchange.
• Third-quarter GAAP diluted EPS was $1.17 and adjusted diluted EPS, which excludes specified items, was $1.40, reflecting 42.9 percent growth versus the prior year.¹
• Abbott projects full-year 2021 diluted EPS from continuing operations on a GAAP basis of $3.55 to $3.65 and full-year adjusted diluted EPS from continuing operations of $5.00 to $5.10, reflecting growth of 38.4 percent at the mid-point versus prior year.²
• In August, Abbott announced U.S. FDA approval of its Amplatzer^® Amulet^® device, which offers immediate closure of the left atrial appendage – an area in the heart where blood clots can form.
• In August, Abbott announced results of the company's GUIDE-HF clinical trial, which showed Abbott's CardioMEMS^® remote monitoring system can improve care for more patients living with heart failure. Abbott filed a Premarket Approval (PMA) supplement with the FDA for consideration of an expanded indication for CardioMEMS.
• In September, Abbott announced U.S. FDA approval of its Portico^® with FlexNav^® transcatheter aortic valve replacement (TAVR) system to treat people with symptomatic, severe aortic stenosis who are at high or extreme risk for open-heart surgery.
• During the third quarter, Abbott acquired Walk Vascular, LLC, a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots.

"We achieved another quarter of strong growth overall and across all four of our major business areas," said Robert B. Ford, president and chief executive officer, Abbott. "We're particularly pleased with the continued advancements of our new product pipeline, including several recent launches in large, high-growth markets."

THIRD-QUARTER BUSINESS OVERVIEW
Note: Management believes that measuring sales growth rates on an organic basis is an appropriate way for investors to best understand the underlying performance of the business. Organic sales growth excludes the impact of foreign exchange.

Following are sales by business segment and commentary for the third quarter 2021:

Total Company
($ in millions)

												% Change vs. 3Q20
						Sales 3Q21						Reported						Organic
						U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total *						4,368		6,560		10,928		31.2		18.7		23.4		31.2		17.0		22.4
Nutrition						919		1,189		2,108		12.3		7.6		9.6		12.3		6.5		8.9
Diagnostics						1,947		1,965		3,912		71.8		30.5		48.2		71.8		28.0		46.8
Established Pharmaceuticals						--		1,265		1,265		n/a		15.1		15.1		n/a		15.3		15.3
Medical Devices						1,496		2,136		3,632		9.7		18.2		14.6		9.7		15.7		13.1
* Total Q3 2021 Abbott sales from continuing operations include Other Sales of approximately $11 million.
												% Change vs. 9M20
						Sales 9M21						Reported						Organic
						U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total *						11,787		19,820		31,607		33.6		31.4		32.2		33.6		27.3		29.6
Nutrition						2,628		3,624		6,252		7.8		10.7		9.5		7.8		8.7		8.3
Diagnostics						4,743		6,430		11,173		69.8		75.3		73.0		69.8		68.7		69.2
Established Pharmaceuticals						--		3,515		3,515		n/a		11.4		11.4		n/a		12.0		12.0
Medical Devices						4,385		6,233		10,618		23.1		25.5		24.5		23.1		19.0		20.7
* Total 9M 2021 Abbott sales from continuing operations include Other Sales of approximately $49 million.
n/a = Not Applicable.

Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.

Third-quarter 2021 worldwide sales of $10.9 billion increased 23.4 percent on a reported basis and 22.4 percent on an organic basis.

Compared to pre-pandemic sales in 2019, worldwide sales, excluding COVID-19 testing-related sales³, increased 11.7 percent on both a reported and organic basis in the third quarter.

Nutrition
($ in millions)

															% Change vs. 3Q20
									Sales 3Q21						Reported						Organic
									U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total									919		1,189		2,108		12.3		7.6		9.6		12.3		6.5		8.9
Pediatric									586		514		1,100		20.2		(0.8)		9.4		20.2		(2.2)		8.6
Adult									333		675		1,008		0.6		15.0		9.8		0.6		14.1		9.3
															% Change vs. 9M20
									Sales 9M21						Reported						Organic
									U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total									2,628		3,624		6,252		7.8		10.7		9.5		7.8		8.7		8.3
Pediatric									1,622		1,637		3,259		8.9		0.5		4.5		8.9		(1.7)		3.4
Adult									1,006		1,987		2,993		6.0		20.9		15.5		6.0		18.9		14.2

Worldwide Nutrition sales increased 9.6 percent on a reported basis and 8.9 percent on an organic basis in the third quarter. Strong performance of Ensure^®, Abbott's market-leading complete and balanced nutrition brand, and Glucerna^®, Abbott's market-leading diabetes nutrition brand, led to global Adult Nutrition sales growth of 9.8 percent on a reported basis and 9.3 percent on an organic basis.  

Worldwide Pediatric Nutrition sales increased 9.4 percent on a reported basis and 8.6 percent on an organic basis. Strong performance of Abbott's market-leading oral hydration brand, Pedialyte^®, and continued share growth in infant nutrition led to U.S. Pediatric Nutrition growth of 20.2 percent.

Diagnostics
($ in millions)

												% Change vs. 3Q20
						Sales 3Q21						Reported						Organic
						U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total						1,947		1,965		3,912		71.8		30.5		48.2		71.8		28.0		46.8
Core Laboratory						291		1,001		1,292		2.4		12.2		9.9		2.4		9.9		8.1
Molecular						162		183		345		(26.2)		(23.1)		(24.6)		(26.2)		(25.0)		(25.6)
Point of Care						100		35		135		3.9		1.5		3.3		3.9		(0.1)		2.8
Rapid Diagnostics						1,394		746		2,140		161.4		118.5		144.7		161.4		115.0		143.3
												% Change vs. 9M20
						Sales 9M21						Reported						Organic
						U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total						4,743		6,430		11,173		69.8		75.3		73.0		69.8		68.7		69.2
Core Laboratory						845		2,935		3,780		0.6		26.9		19.9		0.6		22.1		16.4
Molecular						431		651		1,082		0.5		23.5		13.2		0.5		17.6		9.9
Point of Care						289		112		401		4.0		2.5		3.6		4.0		(1.0)		2.6
Rapid Diagnostics						3,178		2,732		5,910		154.9		280.1		200.7		154.9		266.6		195.8

Worldwide Diagnostics sales increased 48.2 percent on a reported basis in the third quarter and increased 46.8 percent on an organic basis. Global COVID-19 testing-related sales were $1.9 billion in the third quarter, led by combined sales of $1.6 billion from Abbott's BinaxNOW^®, Panbio^® and ID NOW^® rapid testing platforms. Excluding COVID-19 testing-related sales, worldwide diagnostics sales increased 14.1 percent on a reported basis in the third quarter and 12.5 percent on an organic basis.⁴

Compared to the pre-pandemic 2019 baseline, sales in Core Laboratory and Molecular Diagnostics, excluding COVID-19 testing-related sales, grew 5.8 percent and 14.9 percent, respectively, on a reported basis in the third quarter and grew 4.9 percent and 13.6 percent, respectively, on an organic basis.⁵

Established Pharmaceuticals
($ in millions)

													% Change vs. 3Q20
							Sales 3Q21						Reported						Organic
							U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total							--		1,265		1,265		n/a		15.1		15.1		n/a		15.3		15.3
Key Emerging Markets							--		936		936		n/a		17.1		17.1		n/a		17.9		17.9
Other							--		329		329		n/a		9.7		9.7		n/a		8.5		8.5
													% Change vs. 9M20
							Sales 9M21						Reported						Organic
							U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total							--		3,515		3,515		n/a		11.4		11.4		n/a		12.0		12.0
Key Emerging Markets							--		2,672		2,672		n/a		12.4		12.4		n/a		14.2		14.2
Other							--		843		843		n/a		8.1		8.1		n/a		5.4		5.4

Established Pharmaceuticals sales increased 15.1 percent on a reported basis in the third quarter and increased 15.3 percent on an organic basis.

Key Emerging Markets include India, Brazil, Russia and China along with several additional emerging countries that represent the most attractive long-term growth opportunities for Abbott's branded generics product portfolio. Sales in these geographies increased 17.1 percent on a reported basis in the quarter and increased 17.9 percent on an organic basis. Organic sales growth was led by strong growth across several geographies, including China, Russia and India.

Other sales increased 9.7 percent on a reported basis in the quarter and increased 8.5 percent on an organic basis.

Medical Devices
($ in millions)

												% Change vs. 3Q20
						Sales 3Q21						Reported						Organic
						U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total						1,496		2,136		3,632		9.7		18.2		14.6		9.7		15.7		13.1
Rhythm Management						266		305		571		9.6		15.3		12.6		9.6		12.7		11.2
Electrophysiology						192		293		485		(0.1)		17.6		9.9		(0.1)		15.9		8.9
Heart Failure						170		59		229		17.6		28.0		20.1		17.6		25.4		19.5
Vascular						219		425		644		(4.3)		6.3		2.5		(4.3)		3.9		0.9
Structural Heart						177		215		392		11.2		10.9		11.0		11.2		9.2		10.1
Neuromodulation						149		41		190		(12.5)		13.8		(7.9)		(12.5)		11.5		(8.3)
Diabetes Care						323		798		1,121		43.1		29.4		33.0		43.1		26.0		30.6
												% Change vs. 9M20
						Sales 9M21						Reported						Organic
						U.S.		Int'l		Total		U.S.		Int'l		Total		U.S.		Int'l		Total
Total						4,385		6,233		10,618		23.1		25.5		24.5		23.1		19.0		20.7
Rhythm Management						776		881		1,657		18.5		21.2		19.9		18.5		14.9		16.6
Electrophysiology						580		823		1,403		21.8		26.2		24.4		21.8		20.9		21.3
Heart Failure						483		167		650		17.5		18.7		17.8		17.5		12.5		16.2
Vascular						684		1,292		1,976		8.9		16.7		13.9		8.9		11.2		10.4
Structural Heart						537		654		1,191		39.0		28.8		33.2		39.0		22.3		29.5
Neuromodulation						460		124		584		17.4		28.3		19.6		17.4		20.8		18.1
Diabetes Care						865		2,292		3,157		41.0		32.0		34.3		41.0		24.3		28.7

Worldwide Medical Devices sales increased 14.6 percent on a reported basis in the third quarter and increased 13.1 percent on an organic basis. Strong growth in the quarter was driven by continued recovery from the COVID-19 pandemic and strong growth in Diabetes Care.

Compared to pre-pandemic sales in 2019, Medical Devices sales increased 18.5 percent on a reported basis and 16.1 percent on an organic basis in the third quarter, led by double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care.⁶

In Diabetes Care, FreeStyle Libre^® and Libre Sense^™ sales were $968 million in the quarter, which represents sales growth of 41.6 percent on a reported basis and 38.8 percent on an organic basis. 

During the quarter, Abbott continued to strengthen its Medical Devices portfolio with several new products, including:

• U.S. FDA approval of Amplatzer Amulet Left Atrial Appendage Occluder to treat people with atrial fibrillation who are at risk of ischemic stroke.
• U.S. FDA approval of Portico with FlexNav transcatheter aortic valve replacement (TAVR) system to treat people with symptomatic, severe aortic stenosis who are at high risk for open-heart surgery.
• U.S. FDA approval of Amplatzer^™ Talisman^™ PFO Occlusion System to treat people with a patent foramen ovale – a small opening between the upper chambers of the heart – who are at risk of recurrent ischemic stroke.
• Abbott acquired Walk Vascular, LLC, a commercial-stage medical device company with a minimally invasive thrombectomy system designed to remove peripheral blood clots.

ABBOTT'S EARNINGS-PER-SHARE GUIDANCE
Abbott projects 2021 diluted earnings per share from continuing operations under GAAP of $3.55 to $3.65. Abbott forecasts specified items for the full-year 2021 of $1.45 per share primarily related to intangible amortization, restructuring and cost reduction initiatives, including expenses to align its COVID-19 testing-related business with changes during the year in current and projected testing demand, expenses associated with acquisitions and other net expenses. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $5.00 to $5.10 for full-year 2021.

ABBOTT DECLARES 391^ST CONSECUTIVE QUARTERLY DIVIDEND
On Sept. 15, 2021, the board of directors of Abbott declared the company's quarterly dividend of $0.45 per share. Abbott's cash dividend is payable Nov. 15, 2021 to shareholders of record at the close of business on Oct. 15, 2021.

Abbott has increased its dividend payout for 49 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index, which tracks companies that have annually increased their dividend for at least 25 consecutive years.

About Abbott:
Abbott is a global healthcare leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritionals and branded generic medicines. Our 109,000 colleagues serve people in more than 160 countries.

Connect with us at www.abbott.com, on LinkedIn at www.linkedin.com/company/abbott-/, on Facebook at www.facebook.com/Abbott and on Twitter @AbbottNews.

Abbott will live-webcast its third-quarter earnings conference call through its Investor Relations website at www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the webcast will be available later that day.

— Private Securities Litigation Reform Act of 1995 —
A Caution Concerning Forward-Looking Statements

Some statements in this news release may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended Dec. 31, 2020, and are incorporated herein by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law. 

1	Third-quarter 2021 diluted EPS from continuing operations on a GAAP basis reflects 69.6 percent growth.
2	Full-year 2021 guidance for diluted EPS from continuing operations on a GAAP basis reflects growth of 44.5 percent at the mid-point versus prior year.
3	In the third quarter of 2019, worldwide sales were $8.076 billion. In the third quarter of 2021, COVID-19 testing-related sales were $1.908 billion. In the nine months of 2019, worldwide sales were $23.590 billion. In the nine months of 2021, COVID-19 testing-related sales were $5.360 billion.
4	In the third quarter of 2020, Diagnostics sales were $2.64 billion, which included COVID-19 testing-related sales of $0.9 billion.
5	In the third quarter of 2019, Core Laboratory and Molecular Diagnostics sales were $1.177 billion and $111 million, respectively. In the third quarter of 2021, COVID-19 testing-related sales for Core Laboratory and Molecular Diagnostics were $47 million and $218 million, respectively.
6	In the third quarter of 2019, Medical Devices sales were $3.065 billion.

 

Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Third Quarter Ended September 30, 2021 and 2020
(in millions, except per share data)
(unaudited)
		3Q21		3Q20		% Change
Net Sales		$10,928		$8,853		23.4
Cost of products sold, excluding amortization expense		4,423		3,966		11.5
Amortization of intangible assets		520		510		1.8
Research and development		672		580		16.1
Selling, general, and administrative		2,767		2,302		20.2
Total Operating Cost and Expenses		8,382		7,358		13.9
Operating Earnings		2,546		1,495		70.2
Interest expense, net		123		127		(3.3)
Net foreign exchange (gain) loss		4		(7)		n/m
Other (income) expense, net		(74)		(46)		63.1
Earnings from Continuing Operations before taxes		2,493		1,421		75.3
Tax expense on Earnings from Continuing Operations		393		189		107.3	1)
Earnings from Continuing Operations		2,100		1,232		70.4
Earnings from Discontinued Operations, net of taxes		--		--		n/m
Net Earnings		$2,100		$1,232		70.4
Earnings from Continuing Operations, excluding
Specified Items, as described below		$2,518		$1,760		43.1	2)
Diluted Earnings per Common Share from:
Continuing Operations		$1.17		$0.69		69.6
Discontinued Operations		--		--		n/m
Total		$1.17		$0.69		69.6
Diluted Earnings per Common Share from Continuing
Operations, excluding Specified Items, as described below		$1.40		$0.98		42.9	2)
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options		1,789		1,788

NOTES: See tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations" for an explanation of certain non-GAAP financial information. n/m = Percent change is not meaningful. See footnotes below.

1)	2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $20 million in excess tax benefits associated with share-based compensation.
2)	2021 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $418 million, or $0.23 per share, for intangible amortization and other expenses primarily associated with restructuring actions and acquisitions, partially offset by a change in estimate to the restructuring actions recognized in the second quarter related to Abbott's manufacturing network for COVID-19 diagnostic tests to reflect current and projected demand.
	2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $528 million, or $0.29 per share, for intangible amortization and impairment expenses and other net expenses primarily associated with acquisitions, restructuring actions and income from a litigation settlement.

 

Abbott Laboratories and Subsidiaries
Condensed Consolidated Statement of Earnings
Nine Months Ended September 30, 2021 and 2020
(in millions, except per share data)
(unaudited)
		9M21		9M20		% Change
Net Sales		$31,607		$23,907		32.2
Cost of products sold, excluding amortization expense		13,771		10,510		31.0
Amortization of intangible assets		1,533		1,624		(5.7)
Research and development		1,980		1,722		15.0
Selling, general, and administrative		8,276		7,126		16.1
Total Operating Cost and Expenses		25,560		20,982		21.8
Operating Earnings		6,047		2,925		106.7
Interest expense, net		370		373		(0.7)
Net foreign exchange (gain) loss		7		(3)		n/m
Other (income) expense, net		(214)		(25)		n/m
Earnings from Continuing Operations before taxes		5,884		2,580		128.0
Tax expense on Earnings from Continuing Operations		802		267		n/m	1)
Earnings from Continuing Operations		5,082		2,313		119.7
Earnings from Discontinued Operations, net of taxes		--		20		n/m
Net Earnings		$5,082		$2,333		117.8
Earnings from Continuing Operations, excluding
Specified Items, as described below		$7,001		$3,940		77.7	2)
Diluted Earnings per Common Share from:
Continuing Operations		$2.83		$1.29		119.4
Discontinued Operations		--		0.01		n/m
Total		$2.83		$1.30		117.7
Diluted Earnings per Common Share from Continuing
Operations, excluding Specified Items, as described below		$3.89		$2.20		76.8	2)
Average Number of Common Shares Outstanding
Plus Dilutive Common Stock Options		1,791		1,785

NOTES: See tables titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations" for an explanation of certain non-GAAP financial information. n/m = Percent change is not meaningful. See footnotes below.

1)	2021 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $97 million in excess tax benefits associated with share-based compensation.
	2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $80 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $87 million in excess tax benefits associated with share-based compensation.
2)	2021 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.919 billion, or $1.06 per share, for intangible amortization and other net expenses primarily associated with restructuring actions, certain litigation and acquisitions.
	2020 Net Earnings and Diluted Earnings per Common Share from Continuing Operations, excluding Specified Items, excludes net after-tax charges of $1.627 billion, or $0.91 per share, for intangible amortization expense, impairment charges and other net expense primarily associated with acquisitions, restructuring actions and income from a litigation settlement.

 

Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
Third Quarter Ended September 30, 2021 and 2020
(in millions, except per share data)
(unaudited)
		3Q21
		As Reported (GAAP)		Specified Items		As Adjusted		% to Sales
Intangible Amortization		$           520		$     (520)		$         --
Gross Margin		5,985		445		6,430		58.8%
R&D		672		(21)		651		6.0%
SG&A		2,767		(30)		2,737		25.0%
Other (income) expense, net		(74)		7		(67)
Earnings from Continuing Operations before taxes		2,493		489		2,982
Tax expense on Earnings from Continuing Operations		393		71		464
Earnings from Continuing Operations		2,100		418		2,518
Diluted Earnings per Share from Continuing Operations		$1.17		$0.23		$1.40
Specified items reflect intangible amortization expense of $520 million and net pretax income of $31 million, primarily associated with a change in estimate to the restructuring actions recognized in the second quarter, partially offset by costs associated with acquisitions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
		3Q20
		As Reported (GAAP)		Specified Items		As Adjusted		% to Sales
Intangible Amortization		$            510		$     (510)		$          --
Gross Margin		4,377		705		5,082		57.4%
R&D		580		(21)		559		6.3%
SG&A		2,302		63		2,365		26.7%
Other (income) expense, net		(46)		(1)		(47)
Earnings from Continuing Operations before taxes		1,421		664		2,085
Tax expense on Earnings from Continuing Operations		189		136		325
Earnings from Continuing Operations		1,232		528		1,760
Diluted Earnings per Share from Continuing Operations		$0.69		$0.29		$0.98
Specified items reflect intangible amortization expense of $510 million and other net expenses of $154 million, primarily associated with acquisitions, restructuring actions and other expenses and litigation settlement income. See tables titled "Details of Specified Items" for additional details regarding specified items.

 

Abbott Laboratories and Subsidiaries
Non-GAAP Reconciliation of Financial Information From Continuing Operations
Nine Months Ended September 30, 2021 and 2020
(in millions, except per share data)
(unaudited)
		9M21
		As Reported (GAAP)		Specified Items		As Adjusted		% to Sales
Intangible Amortization		$         1,533		$  (1,533)		$         --
Gross Margin		16,303		2,042		18,345		58.0%
R&D		1,980		(67)		1,913		6.1%
SG&A		8,276		(274)		8,002		25.3%
Other (income) expense, net		(214)		30		(184)
Earnings from Continuing Operations before taxes		5,884		2,353		8,237
Tax expense on Earnings from Continuing Operations		802		434		1,236
Earnings from Continuing Operations		5,082		1,919		7,001
Diluted Earnings per Share from Continuing Operations		$2.83		$1.06		$3.89
Specified items reflect intangible amortization expense of $1.533 billion and other net expenses of $820 million, primarily associated with restructuring actions, certain litigation, acquisitions and other expenses. See tables titled "Details of Specified Items" for additional details regarding specified items.
		9M20
		As Reported (GAAP)		Specified Items		As Adjusted		% to Sales
Intangible Amortization		$         1,624		$   (1,624)		$          --
Gross Margin		11,773		1,895		13,668		57.2%
R&D		1,722		(64)		1,658		6.9%
SG&A		7,126		(19)		7,107		29.7%
Other (income) expense, net		(25)		(111)		(136)
Earnings from Continuing Operations before taxes		2,580		2,089		4,669
Tax expense on Earnings from Continuing Operations		267		462		729
Earnings from Continuing Operations		2,313		1,627		3,940
Diluted Earnings per Share from Continuing Operations		$1.29		$0.91		$2.20
Specified items reflect intangible amortization expense of $1.624 billion and other net expenses of $465 million, primarily associated with acquisitions, restructuring actions and other expenses and litigation settlement income. See tables titled "Details of Specified Items" for additional details regarding specified items.

A reconciliation of the third-quarter tax rates for continuing operations for 2021 and 2020 is shown below:

			3Q21
($ in millions)			Pre-Tax Income		Taxes on Earnings		Tax Rate
As reported (GAAP)			$2,493		$        393		15.7%
Specified items			489		71
Excluding specified items			$2,982		$464		15.5%
			3Q20
($ in millions)			Pre-Tax Income		Taxes on Earnings		Tax Rate
As reported (GAAP)			$1,421		$189		13.3%	1)
Specified items			664		136
Excluding specified items			$2,085		$325		15.6%

1)	2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $20 million in excess tax benefits associated with share-based compensation.

A reconciliation of the year-to-date tax rates for continuing operations for 2021 and 2020 is shown below:

			9M21
($ in millions)			Pre-Tax Income		Taxes on Earnings		Tax Rate
As reported (GAAP)			$5,884		$        802		13.6%	2)
Specified items			2,353		434
Excluding specified items			$8,237		$1,236		15.0%
			9M20
($ in millions)			Pre-Tax Income		Taxes on Earnings		Tax Rate
As reported (GAAP)			$2,580		$267		10.4%	3)
Specified items			2,089		462
Excluding specified items			$4,669		$729		15.6%

2)	2021 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $97 million in excess tax benefits associated with share-based compensation.
3)	2020 Tax expense on Earnings from Continuing Operations includes the recognition of approximately $80 million of net tax benefits as a result of the resolution of various tax positions related to prior years and approximately $87 million in excess tax benefits associated with share-based compensation.

 

Abbott Laboratories and Subsidiaries
Details of Specified Items
Third Quarter Ended September 30, 2021
(in millions, except per share data)
(unaudited)
		Acquisition or Divestiture-related (a)		Restructuring and Cost Reduction Initiatives (b)		Intangible Amortization		Other (c)		Total Specifieds
Gross Margin		$              16		$            (96)		$          520		$         5		$       445
R&D		(4)		--		--		(17)		(21)
SG&A		(12)		(23)		--		5		(30)
Other (income) expense, net		6		--		--		1		7
Earnings from Continuing Operations before taxes		$              26		$            (73)		$          520		$       16		489
Tax expense on Earnings from Continuing Operations (d)										71
Earnings from Continuing Operations										$       418
Diluted Earnings per Share from Continuing Operations										$      0.23

The table above provides additional details regarding the specified items described on table titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."

a)	Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for the integration of systems, processes and business activities.
b)	Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites. The Gross Margin amount includes a credit associated with a change in estimate to the charges taken in the second quarter for a restructuring plan related to Abbott's manufacturing network for COVID-19 diagnostic tests to reflect current and projected demand.
c)	Other includes incremental costs to comply with the European Union's Medical Device (MDR) and In Vitro Diagnostics Medical Device (IVDR) Regulations for previously approved products.
d)	Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

 

Abbott Laboratories and Subsidiaries
Details of Specified Items
Third Quarter Ended September 30, 2020
(in millions, except per share data)
(unaudited)
		Acquisition or Divestiture-related (a)		Restructuring and Cost Reduction Initiatives (b)		Intangible Amortization		Other (c)		Total Specifieds
Gross Margin		$              16		$              27		$          510		$      152		$       705
R&D		(1)		(1)		--		(19)		(21)
SG&A		(28)		(9)		--		100		63
Other (income) expense, net		(2)		--		--		1		(1)
Earnings from Continuing Operations before taxes		$              47		$              37		$          510		$       70		664
Tax expense on Earnings from Continuing Operations (d)										136
Earnings from Continuing Operations										$       528
Diluted Earnings per Share from Continuing Operations										$      0.29

The table above provides additional details regarding the specified items described on table titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."

a)	Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention and the integration of systems, processes and business activities.
b)	Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.
c)	Other primarily relates to the impairment of an intangible asset and the costs to acquire R&D assets, partially offset by income from the settlement of litigation.
d)	Reflects the net tax benefit associated with the specified items, the resolution of prior years' tax positions and excess tax benefits associated with share-based compensation.

 

Abbott Laboratories and Subsidiaries
Details of Specified Items
Nine Months Ended September 30, 2021
(in millions, except per share data)
(unaudited)
		Acquisition or Divestiture-related (a)		Restructuring and Cost Reduction Initiatives (b)		Intangible Amortization		Other (c)		Total Specifieds
Gross Margin		$              56		$            433		$        1,533		$        20		$    2,042
R&D		(9)		1		--		(59)		(67)
SG&A		(43)		(22)		--		(209)		(274)
Other (income) expense, net		3		1		--		26		30
Earnings from Continuing Operations before taxes		$            105		$            453		$        1,533		$      262		2,353
Tax expense on Earnings from Continuing Operations (d)										434
Earnings from Continuing Operations										$    1,919
Diluted Earnings per Share from Continuing Operations										$      1.06

The table above provides additional details regarding the specified items described on table titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."

a)	Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for the integration of systems, processes and business activities.
b)	Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites. The Gross Margin amount includes charges associated with a restructuring plan to align Abbott's manufacturing network for COVID-19 diagnostic tests with changes during the year in current and projected testing demand.
c)	Other primarily relates to the costs related to certain litigation, the acquisition of a research and development asset, the impairments of an equity investment and an intangible asset, and the gain on the disposition of an equity method investment.
d)	Reflects the net tax benefit associated with the specified items and excess tax benefits associated with share-based compensation.

 

Abbott Laboratories and Subsidiaries
Details of Specified Items
Nine Months Ended September 30, 2020
(in millions, except per share data)
(unaudited)
		Acquisition or Divestiture-related (a)		Restructuring and Cost Reduction Initiatives (b)		Intangible Amortization		Other (c)		Total Specifieds
Gross Margin		$              61		$             57		$        1,624		$      153		$    1,895
R&D		(8)		(9)		--		(47)		(64)
SG&A		(83)		(36)		--		100		(19)
Other (income) expense, net		(3)		--		--		(108)		(111)
Earnings from Continuing Operations before taxes		$            155		$            102		$        1,624		$      208		2,089
Tax expense on Earnings from Continuing Operations (d)										462
Earnings from Continuing Operations										$    1,627
Diluted Earnings per Share from Continuing Operations										$      0.91

The table above provides additional details regarding the specified items described on table titled "Non-GAAP Reconciliation of Financial Information From Continuing Operations."

a)	Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating the acquired businesses and include expenditures for retention, severance, and the integration of systems, processes and business activities.
b)	Restructuring and cost reduction initiative expenses include severance, outplacement, and other direct costs associated with specific restructuring plans and cost reduction initiatives. Restructuring and cost reduction plans consist of distinct initiatives to streamline operations including the consolidation and rationalization of business activities and facilities, workforce reductions, the transfer of product lines between manufacturing facilities, and the transfer of other business activities between sites.
c)	Other primarily relates to impairment charges related to certain assets and the costs to acquire R&D assets, partially offset by income from the settlement of litigation.
d)	Reflects the net tax benefit associated with the specified items, the resolution of prior years' tax positions and excess tax benefits associated with share-based compensation.

 

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SOURCE Abbott