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UPDATE: Abbott Reports 4 Percent Dx Growth on Strong Core Lab, Point of Care Sales

This article has been updated to include comments from Abbott's earnings call.

NEW YORK (GenomeWeb) – Abbott reported Wednesday morning that second quarter sales in its Diagnostics business grew 4 percent year over year, driven in part by a 12 percent year-over-year increase in point-of-care diagnostic sales.

For the three months ended June 30, Abbott reported overall Q2 revenues of $5.33 billion, up 3 percent from $5.17 billion in Q2 last year. The company beat the consensus Wall Street estimate of $5.24 billion.

Abbott reported Diagnostics sales of $1.23 billion, up 4 percent year over year on a reported basis. Within Diagnostics, core laboratory Q2 sales grew 3 percent to $978 million, molecular revenues grew nearly 3 percent to $119 million, and point of care grew almost 12 percent year over year to $129 million, on a reported basis.

Abbott noted that its molecular diagnostics sales were driven by continued strong growth in its infectious disease testing business. Its sales numbers were partly offset by the planned scale down of its genetics business.

On a conference call to review Q2 financial results, Abbott CEO Miles White said, "In diagnostics and nutrition … we have been investing in R&D and infrastructure in high-growth geographies that have strengthened our global scale and competitiveness. In Diagnostics we achieved [operational] sales growth of 6 percent in the quarter driven by continued above-market performance in core laboratory and point-of-care diagnostics. … There's an opportunity here to further maintain, if not improve upon, the growth trajectory as we prepare to bring multiple next-generation products to market in every area of diagnostics in which we participate. We will provide more detail around these systems and around launch plans in the second half of the year."   

In other businesses, Nutrition sales grew 1 percent (including an unfavorable 3 percent foreign exchange effect) to $1.74 billion, Established Pharmaceuticals grew a fraction of 1 percent to $980 million, and Medical Devices grew around 6 percent to $1.37 billion in the second quarter.

Abbott reported net earnings of $615 million, or $0.41 per share, in Q2 compared to $784 million, or $0.52 per share, in the year-ago period. Excluding special items, EPS was $0.55, exceeding the company's previous guidance range and besting analysts' consensus estimate of $0.53.

Within diagnostics, in the second quarter, the firm announced the global launch of AlinIQ, an informatics solution for diagnostics laboratories aimed at increasing productivity and flexibility in managing data throughout hospital networks.

Following that, five systems are in the pipeline, Abbott said. They include a molecular diagnostic system that the firm expects to launch in Europe in the second half of 2017; a next-generation system for the point-of-care segment that the firm will launch in Europe later this year, and in the US in 2017; an immunoassay and chemical testing system for the core labs segment, which the firm will roll out in Europe before the end of this year and in the US early in 2018; a blood screening system that it will roll out later this year in Europe; and a hematology testing system that it will roll out in Europe early in 2017, and in the US early in 2018.

These are not upgrades or incremental improvements on existing systems, White said, though he didn't elaborate.

The firm spent $348 million on R&D in Q2, up from $345 million in Q2 2015, and logged $1.74 billion in SG&A expenses, up from $1.73 billion.

Abbott said its full-year 2016 EPS for continuing operations under GAAP is projected to be $1.26 to $1.36. Its projected full-year 2016 adjusted EPS for continuing operations remains unchanged at $2.14 to $2.24.

The firm is in the process of two major acquisitions. Early this year, Abbott inked a $5.8 billion deal to acquire Alere in a move intended to strengthen its point-of-care and molecular diagnostics businesses. It also signed an agreement in April to acquire medical device maker St. Jude Medical for $25 billion.

In response to an analyst question regarding the pending Alere acquisition, White said, "From our perspective, there's no change other than the passage of time. … We've made a number of requests regarding books and records and things we want to have access to, to audit. Some of the information has been provided and a fair amount of it has not.

"One thing I am certain of is that they are trying to do everything they can, their way, to address the challenges in the company," he added. "I don't think otherwise. Whether it all works out the way it was planned or not, I don't know, I can't predict."

White went on to speak about the potential of the acquisition. "As I said many times, we like the products, and to us it is an opportunity to expand our diagnostics business," he said. "Our diagnostics business is one of the most consistent and best performing in our country and in the industry.  … If for some reason it doesn't work out, then we still have one of the best performing businesses in the industry. But if we can add to it, even better."

Regarding juggling the pending acquisitions of Alere and St. Jude Medical, White said he was confident about Abbott's ability to integrate both companies.

The transaction with St. Jude Medical would create a medical device business with a portfolio that includes products in cardiovascular, neuromodulation, diabetes, and vision care. "Everything is tracking well ... there's not much in the way of surprises there," White said in reference to the St. Jude acquisition. "We still hope to close that before the end of the year."

In Wednesday afternoon trade on the New York Stock Exchange, shares of Abbott were up around 2 percent at $42.79.

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