NEW YORK (GenomeWeb) – Abbott today said that its Diagnostics business revenues grew 47 percent year over year in the second quarter, driven by sales in its rapid diagnostics business, which reflect results for Alere acquired in October 2017.
On an organic basis, without rapid diagnostics sales, Abbott's worldwide diagnostics sales increased 7 percent, driven by strong core lab and MDx sales.
For the three months ended June 30, Abbott reported overall Q2 revenues of $7.77 billion, up 17 percent on a reported basis and 8 percent on an organic basis from $6.64 billion in Q2 2017. The company beat the consensus Wall Street estimate of $7.71 billion.
The firm's organic sales growth excludes prior-year results for the Abbott Medical Optics and St. Jude Medical vascular closure businesses, which the company divested during the first quarter of 2017; the current and prior-year results for rapid diagnostics; and the impact of foreign exchange.
Abbott reported Diagnostics sales of $1.87 billion compared to $1.27 billion in the prior-year quarter. Within Diagnostics, core laboratory Q2 sales grew 11 percent to $1.13 billion driven by continued share gains globally; molecular revenues grew 8 percent to $122 million; and point of care dropped almost 1 percent to $139 million. The firm booked $484 million in rapid diagnostics sales, led by infectious disease and cardiometabolic testing.
In molecular diagnostics, worldwide sales were led by strong growth in infectious disease testing, Abbott’s core area of focus in MDx markets. The sales growth was partially offset by a planned scale-down in other testing areas, primarily in the US, Abbott said.
On a conference call to review the company's Q2 financial results, Abbott CEO Miles White said the Alere acquisition puts the firm in a "very strong position" and expands its capabilities in point-of-care and distributed testing. "One of the things we would like to do is….renew, update, or enhance a number of [its] products and put a lot more into R&D and innovation," he said.
White said that the Alere portfolio is "stable" and currently is experiencing "low growth," but in the longer term, the firm expects the business will achieve high growth.
Regarding the rollout of the firm's next generation Alinity instruments and diagnostic assays in the US, Europe, and elsewhere, White said that systems of this magnitude tend to be contracted for five, seven, or 10 years, and "[t]he change from one competitor to another and the move from old to new systems is not quick."
The firm offers a larger test menu on these new systems in Europe than in the US and elsewhere, he noted. Each instrument can have "anywhere from 150 to 200 different tests…each of which has to be individually approved and licensed," White said. However, Abbott is seeing a win rate of around 97 percent in accounts where it already has product placements.
Where the firm is trying to replace competitive systems, its win rate "is well above 50 percent, and those accounts have to make a decision that they are going to swap out everything that they had for a number of years," he said.
In point of care, the company lost some momentum during Q2 partly because of changes related to integrating Alere rapid diagnostics, and temporary issues with some large customer accounts, White said.
In its other businesses, Nutrition sales grew 7 percent to $1.86 billion; Established Pharmaceuticals grew 11 percent to $1.13 billion; and Medical Devices grew 11 percent to $2.89 billion.
Abbott reported net earnings of $733 million, or $.41 per share, in Q2 2018 compared to $283 million, or $.16 per share, in the year-ago period. On an adjusted basis, EPS was $.73, exceeding the company's previous guidance range and topping analysts' consensus estimate of $.71.
The firm spent $575 million on R&D in Q2, up 11 percent from $520 million in the prior-year quarter, and logged $2.47 billion in SG&A expenses, up 15 percent from $2.15 billion in the Q2 2017.
Abbott issued third-quarter 2018 guidance for diluted earnings per share of $0.32 to $0.34. Excluding specified items, projected adjusted diluted earnings per share is anticipated to be 0.73 to $0.75.
Abbott raised its full-year 2018 EPS guidance range from continuing operations to between $1.34 and $1.40 per share. The firm estimates 2018 adjusted EPS from continuing operations in the range of $2.85 to $2.91.
During its Q1 earnings announcement in April, the firm projected 2018 diluted earnings per share from continuing operations to be in the range of $1.23 to $1.33 and adjusted diluted earnings per share from continuing operations to be between $2.80 and $2.90.
The company said that its expects diagnostics sales growth in the mid- to high-single digits in Q3 and that rapid diagnostics will contribute $500 million in sales.
In early morning trading on the New York Stock Exchange, shares of Abbott were up 4 percent at $65.32.