Abbott Conference Call Highlights

Abbott

reported its third quarter earnings on Tuesday. Shares of the company are down two percent. Below are some key highlights from its conference call: • Performance and Results: • Reported adjusted earnings per share above expectations and another quarter of sequential improvement in total company sales growth. • Raising the midpoint of our full-year adjusted EPS guidance range, which is now $2.25 to $2.27. • Third quarter adjusted earnings per share of $0.62 increased approximately 13% including discontinued operations. • Continuing operations sales increased 6.7% operationally. • Emerging market sales will now represent nearly 50% of Abbott's total sales, and increased 15% in the quarter with double-digit growth. • In the quarter, we also advanced a number of transactions in our branded generics business to accelerate our ability to drive balanced and sustainable growth in emerging geographies. • We remain on track to divest our developed markets business to Mylan in the first quarter of next year. • Mylan is well-positioned with its global scale and capabilities to do well with this business over the long term. • We completed our acquisition of CFR Pharmaceuticals at the end of September, which establishes Abbott as a top 10 pharmaceutical company in Latin America. • We've largely recovered from the sales disruption in our International business. • At the same time, we're executing on multiple new product launches across key geographies. • We continue to invest in our global infrastructure to support the strong global demand for adult and pediatric nutrition. • A stronger footprint in our key geographies will allow us to be closer to our customers and work faster to create and customized new products for their needs. • In Diagnostics, we delivered 6% operational growth. • In Medical Devices, our Vascular business is performing below our expectations, primarily related to sales of our drug-eluting portfolio. • Operational sales growth was driven by strong performance in several businesses. • Total company sales in emerging markets increased 15% on an operational basis in the quarter. • The adjusted gross margin ratio was 55.4% of sales. • Adjusted R&D investment was 6% of sales, and adjusted SG&A expense was 29.4% of sales from continuing operations. Guidance: • Today, we're raising the midpoint and narrowing our EPS guidance range, excluding specified items, to $2.25 to $2.27. • We forecast operational sales growth from continuing operations in the mid-single-digits for the full year 2014. • Based on current exchange rates, we expect exchange to have a negative impact of approximately 2% on our full-year reported sales. • This would result in reported sales growth in the low- to mid-single-digits for the full year 2014. • We forecast an adjusted gross margin ratio of approximately 55% of sales, adjusted R&D investment of somewhat more than 6% of sales • We forecast an adjusted gross margin ratio of approximately 55.5% of sales, adjusted R&D investments of approximately 6.5% of sales, and adjusted SG&A expense of around 28% of sales. • For the fourth quarter of 2014, we expect our global Vision Care business to grow double-digits on an operational basis. Segment Growth: • Nutrition business, where global sales increased 10% in the third quarter. • In our International Pediatric Nutrition business, sales increased 14%. • We have recaptured our share in China and Vietnam, following the previously-reported 2013 sales disruptions, and continue to drive uptake of new products. • International Adult Nutrition sales increased strong double-digits in the quarter, representing the fourth consecutive quarter of double-digit sales growth in this business. • Sales growth was led by continued strong performance of our Ensure brand and double-digit growth in emerging markets. • In our Diagnostics business, sales increased 6% in the third quarter. • In Point of Care Diagnostics, worldwide sales increased 6.7%. • For the fourth quarter, in global Diagnostics, we're forecasting mid- to high-single-digit operational sales growth. • In Medical Devices, Vascular sales decreased low-single-digits in the quarter. • Sales growth was relatively flat excluding the impact of the third quarter 2013 sales true-up related to a third-party agreement. • In Diabetes Care, global sales in the third quarter were somewhat ahead of our expectations. • In Vision Care, sales increased 9% in the third quarter. • Sales of our cataract products, which represent approximately 70% of our Vision Care business, increased double-digits.