A Healthy Outlook for the New Year

Abbott CFO highlights promising product pipeline and sustainable growth at key investor conference.

Strategy and Strength|Jan.10, 2019

Each year brings resolutions. For Abbott, a new year means it is ready to keep delivering on its promises for better health through its life-changing technologies and translating that success into another year of outstanding performance.

A combination of strategic shaping and consistent execution has put Abbott in a compelling position for the year, with the bright promise of sustainable revenue growth to fuel earnings.

"We feel there's never been a more exciting time for Abbott than right now," said Brian Yoor, Abbott's executive vice president of finance and chief financial officer, to investors at the J.P. Morgan Healthcare Conference Tuesday in San Francisco. "Our product pipeline has never been richer than it is today, and we're well positioned over the coming years for sustainable growth."

Coming off 2018 when Abbott shares rose 23 percent compared to broader averages that fell for the full year, the company's core businesses – medical devices, diagnostics, nutrition and medicines – are seeing continued strong performance, Yoor noted. Now the global healthcare company can build on its market-leading positions in high growth areas such as diabetes care, diagnostics and cardiovascular devices.

The surging success with Abbott's FreeStyle Libre portfolio reflects the power of making medical devices simpler, which has changed how people live with diabetes by making it much easier to monitor their glucose levels.

With more than a million users globally, FreeStyle Libre1 and its fingerstick-eliminating convenience offers broad appeal for the more than 400 million people with diabetes around the world. The latest innovations around the FreeStyle Libre portfolio will continue to make it easier to use with smartphones to give users more choices in how they monitor their levels.

Another solid growth area for Abbott continues to be diagnostics. Abbott's Alinity family of diagnostic instruments is seeing accelerated sales in Europe while initiating its roll out in U.S. markets.

The genesis of years of customer-focused research, the revolutionary testing platforms produce results in a significantly smaller footprint, saving space and time for labs and health systems. Each Alinity platform has been engineered to be faster, simpler to operate and be easier to maintain and monitor. As Alinity penetrates new markets and wins renewals with established customers, the benefits for Abbott's performance will continue to grow.

Heart health continues to also dominate healthcare challenges. Abbott's line of technologies aimed at improving lagging heart function from ailments that affect all ages such as our Structural Heart portfolio, is expected to continue its brisk growth and drive results.

"Our structural heart portfolio is having a great impact on people's lives," Yoor said at the conference. "We couldn't be more pleased about where we stand with the assets we have and the opportunities ahead with structural heart – we have a rich pipeline coming."

Having successfully integrated two large recent acquisitions, Abbott is translating that into better performance for its core businesses for the coming year. Equally notable is how aggressive the company has been in paying down the debt it used for its mergers and acquisitions activity – more than $8 billion paid back last year alone, prompting one debt rating agency to upgrade Abbott twice last year.

By paying back debt quickly, Abbott's financial ratios have returned to levels seen before it made its most recent changes. The improved balance sheet has freed up resources to invest in businesses as well as distribute to shareholders through Abbott's 47th consecutive year of dividend increases. The latest dividend hike of 14 percent announced Dec. 14 reflects leadership's confidence in Abbott's sustained growth and in its strategic shaping.

"We know the strengths we have with Libre, with Alinity and our structural heart assets," Yoor said at the conference. "With all the work we've done on our cash flow, it's great to have our financial flexibility again. It's really shaping up to be an exciting year for us."

Reference

1Fingersticks are required for treatment decisions when you see Check Blood Glucose symbol, when symptoms do not match system readings, when you suspect readings may be inaccurate, or when you experience symptoms that may be due to high or low blood glucose.

INDICATIONS AND IMPORTANT SAFETY INFORMATION

FreeStyle Libre and FreeStyle Libre 14 day Flash Glucose Monitoring systems are continuous glucose monitoring (CGM) devices indicated for replacing blood glucose testing and detecting trends and tracking patterns aiding in the detection of episodes of hyperglycemia and hypoglycemia, facilitating both acute and long-term therapy adjustments in persons (age 18 and older) with diabetes. The systems are intended for single patient use and require a prescription.

CONTRAINDICATIONS: Remove the sensor before MRI, CT scan, X-ray, or diathermy treatment.

WARNINGS/LIMITATIONS: Do not ignore symptoms that may be due to low or high blood glucose, hypoglycemic unawareness, or dehydration. Check sensor glucose readings with a blood glucose meter when Check Blood Glucose symbol appears, when symptoms do not match system readings, or when readings are suspected to be inaccurate. The system does not have alarms unless the sensor is scanned, and the system contains small parts that may be dangerous if swallowed. The system is not approved for pregnant women, persons on dialysis, or critically-ill population. Sensor placement is not approved for sites other than the back of the arm and standard precautions for transmission of blood borne pathogens should be taken. The built-in blood glucose meter is not for use on dehydrated, hypotensive, in shock, hyperglycemic-hyperosmolar state, with or without ketosis, neonates, critically-ill patients, or for diagnosis or screening of diabetes. When using FreeStyle LibreLink app, access to a blood glucose monitoring system is required as the app does not provide one. Review all product information before use or contact Abbott Toll Free (855-632-8658) or visit www.freestylelibre.us for detailed indications for use and safety information.