• Sales Growth: 9.5% excluding COVID testing for the year; 10% in Q4 excluding COVID testing.
• Gross Margin Improvement: 70 basis points improvement for the year.
• Operating Cash Flow: $8.5 billion generated for the year.
• Shareholder Returns: $5 billion returned through dividends and share repurchases.
• Adjusted Earnings Per Share Growth: 13% increase in Q4 versus prior year.
• Nutrition Sales Growth: 7% increase in Q4; Ensure brand annual sales surpassed $3 billion.
• Diagnostics Sales Growth: 6% increase in Q4 excluding COVID testing; 16% increase in rapid diagnostics excluding COVID testing.
• EPD Sales Growth: 8.5% increase in Q4.
• Medical Devices Sales Growth: 14% increase in Q4.
• Diabetes Care Sales: $1.8 billion in Q4; 23% growth in Q4.
• Continuous Glucose Monitors Sales: $6.5 billion for the full year; 22% growth for the year.
• Electrophysiology Growth: 9% increase in Q4.
• Structural Heart Growth: 23% increase in Q4.
• Rhythm Management Growth: 7% increase for the full year.
• Heart Failure Growth: 9.5% increase in Q4.
• Vascular Growth: 7% increase in Q4.
• Neuromodulation Sales Growth: 8% increase in Q4.
• Adjusted Gross Margin Ratio: 56.9% of sales in Q4.
• Adjusted R&D Expense: 6.3% of sales in Q4.
• Adjusted SG&A Expense: 26.3% of sales in Q4.
• Adjusted Tax Rate: 15% in Q4.
• 2025 Organic Sales Growth Forecast: 7.5% to 8.5%.
• 2025 Adjusted Earnings Per Share Forecast: $5.05 to $5.25.
• 2025 Adjusted Gross Margin Forecast: Around 57% of sales.
• 2025 Adjusted Operating Margin Forecast: 23.5% to 24% of sales.
• 2025 Adjusted Tax Rate Forecast: 16% to 17%.

• Warning! GuruFocus has detected 4 Warning Sign with ABT.

Release Date: January 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Abbott Laboratories (NYSE:ABT) achieved a 9.5% sales growth excluding COVID testing, demonstrating strong performance across its business segments.
• The company delivered a 70 basis points improvement in gross margin profile, indicating operational efficiency.
• Abbott Laboratories (NYSE:ABT) generated $8.5 billion in operating cash flow, which was used for reinvestment, capacity expansion, debt repayment, and returning $5 billion to shareholders.
• The medical devices segment saw a 14% sales growth, with diabetes care and structural heart products showing significant increases.
• Abbott Laboratories (NYSE:ABT) forecasts organic sales growth of 7.5% to 8.5% for 2025, with adjusted earnings per share expected to grow by double digits at the midpoint.

Negative Points

• Foreign exchange had an unfavorable impact of 1.4% on fourth quarter sales, affecting overall revenue growth.
• The company faces challenges in the Chinese market due to market dynamics, impacting growth in core laboratory diagnostics.
• Abbott Laboratories (NYSE:ABT) anticipates an unfavorable impact of around 2.5% on full-year reported sales due to exchange rates.
• The adjusted tax rate is expected to increase to 16% to 17% in 2025 due to the adoption of the Pillar 2 tax framework.
• The company is dealing with headwinds such as VBP dynamics in China and transient competition in electrophysiology, which could impact growth.

Q & A Highlights

Q: Can you discuss the key growth drivers for Abbott Laboratories in 2025 and how they will impact different business segments? A: Robert Ford, CEO, highlighted that Abbott is well-positioned for 2025 with strong growth drivers across its diversified healthcare portfolio. The absence of declining COVID sales will allow the focus to shift to core growth areas like Libre, TriClip, and Aveir. The company expects to see high single-digit organic sales growth and double-digit EPS growth, driven by top-line performance, gross margin expansion, and operating leverage.

Q: What are the expectations for the Libre 3 supply and the LINGO launch in 2025? A: Robert Ford, CEO, stated that the Libre 3 supply issues are being resolved with two manufacturing sites now operational. The company anticipates growth in the intensive insulin segment and expansion in basal coverage markets. The LINGO launch is progressing well, with plans to expand its availability in the US and potentially internationally.

Q: How is Abbott Laboratories planning to address the competitive dynamics in the Electrophysiology (EP) market in 2025? A: Robert Ford, CEO, explained that Abbott's EP growth strategy includes leveraging its open mapping system and launching new products like the GridX mapping catheter. The company expects to maintain a strong position in the mapping segment and anticipates high single-digit growth for the EP business in 2025, with potential acceleration in the second half of the year.

Q: What are the sustainability prospects for Abbott's gross margin improvements, and how does the company view M&A opportunities? A: Philip Boudreau, CFO, noted that Abbott expects continued gross margin expansion driven by cost management and product mix. The company aims to return to pre-pandemic gross margin levels. Regarding M&A, Robert Ford, CEO, emphasized a balanced approach, focusing on strategic opportunities that offer attractive returns, particularly in med tech and diagnostics.

Q: Can you provide insights into the growth outlook for Abbott's Structural Heart business and the overall med tech market? A: Robert Ford, CEO, highlighted the strong performance of the Structural Heart business, driven by a diversified portfolio including MitraClip, TriClip, and Navitor. The med tech market is benefiting from increased utilization and innovation, with stable pricing trends. Abbott's comprehensive product offerings position it well to capitalize on these market dynamics.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.