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Abbott Q3 Diagnostics Revenues Increase 38 Percent

NEW YORK – Abbott reported Wednesday that its 2020 third quarter Diagnostics business revenues rose 38 percent year over year, due to sales of its COVID-19 portfolio.

For the three months ended Sept. 30, the Abbott Park, Illinois-based firm reported overall revenues of $8.85 billion, up nearly 10 percent on a reported basis from $8.08 billion a year ago and beating the consensus Wall Street estimate of $8.51 billion. The firm said that its organic sales, excluding the impact of foreign exchange, grew 11 percent year over year.

The Abbott Park, Illinois-based company said its Diagnostics business revenues rose to $2.64 billion from $1.91 billion in the prior-year quarter. Within Diagnostics, Core Laboratory Q3 revenues were essentially flat year over year at $1.18 billion; Molecular revenues skyrocketed 313 percent to $458 million from $111 million; Point-of-Care revenues dropped 10 percent to $131 million from $144 million; and Rapid Diagnostics revenues were $875 million, up 83 percent from $477 million in the prior-year quarter.

Strong growth in the Diagnostics business was driven by demand for the firm's COVID-19 tests, including its immunoassay, molecular, and rapid point-of-care tests. The firm's global COVID-19 testing-related sales were $881 million in the quarter. Abbott President and CEO Robert Ford said on a conference call to discuss the earnings results that the company has sold more than 100 million COVID-19 tests across its diagnostic platforms. To meet the demand for COVID-19 testing, Abbott built two new manufacturing facilities in the US, Ford said.

He added that COVID-19 testing has been a big boost for the company and that he doesn't expect that testing will go away anytime soon, even if a vaccine is developed. Testing might decrease to a steadier state, akin to influenza testing, but he said the strides the company has made increasing its installed bases of different platforms will allow continued growth for both COVID-19 testing and other tests on those instruments.

In August, Abbott's rapid SARS-CoV-2 antigen test received Emergency Use Authorization from the US Food and Drug Administration. The firm is selling the instrument-free test for $5, and the US government agreed last month to distribute 150 million of the tests at no cost.

Ford did note that Abbott hasn't seen the demand for SARS-CoV-2 antibody tests that it expected when developing antibody tests earlier this year but added that he expects the opportunity to increase as a vaccine is rolled out. The company's IgG antibody test received EUA in April, and Abbott's new IgM antibody test received EUA earlier this month.

In its other businesses, Nutrition revenues rose 3 percent to $1.92 billion from $1.87 billion; Established Pharmaceuticals dropped 9 percent to $1.10 billion from $1.21 billion; and Medical Devices rose 3 percent to $3.17 billion from $3.07 billion.

Abbott reported net earnings of $1.23 billion, or $.69 per share, in Q3 2020, compared to $960 million, or $.53 per share, in the year-ago period. Adjusted EPS for the recently completed quarter was $.98, beating analysts' consensus estimate of $.90.

The firm spent $580 million on R&D in Q3 2020, down 3 percent from $596 million in Q3 2019, and logged $2.30 billion in SG&A expenses, down 6 percent from $2.44 billion in the prior-year quarter.

Abbott clarified its full-year 2020 guidance range for earnings per share on a GAAP basis to at least $2.35. During its Q2 earnings announcement, the firm guided to EPS of at least $2.00. On an adjusted basis, 2020 EPS is expected to be at least $3.55, compared to a prior guidance of at least $3.25.

Ford said the company is forecasting double-digit growth in revenues this year, and added he expects Abbott's momentum will carry into 2021. That growth is "predicated on two factors," namely a continued recovery of the base business and the ability to ramp up COVID-19 testing. The core laboratory testing outside of COVID-19 has shown nice recovery, particularly in the US, Europe, and China, he said.

Abbott is in the favorable position of not coming out of a hole in 2020, he added. Instead of playing catch-up to 2019 figures like many other companies, the firm's double-digit 2020 growth has allowed for "tremendous momentum" going into 2021, Ford said.

In September, Abbott announced a quarterly dividend of $.36 per share, payable Nov. 16 to shareholders of record on Oct. 15.

In Wednesday morning trading on the New York Stock Exchange, shares of Abbott were down 2 percent at $106.23.