ABBOTT LABORATORIES
For the period ended Oct 16, 2024. Filed Oct 16, 2024.
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Oct 16, 2024 · Filed Oct 16, 2024
Contents
EX-99.1 · NOTES:
NOTES:
See tables on page 13 for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
See footnotes on the following page.
1)2024 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $473 million, or $0.27 per share, for intangible amortization, charges related to intangible impairment, expenses associated with acquisitions and a divestiture, and other net expenses.
2023 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $564 million, or $0.32 per share, for intangible amortization, charges related to the impairment of R&D intangible assets, expenses associated with acquisitions, restructuring and cost reduction initiatives and other net expenses.
Condensed Consolidated Statement of Earnings
Nine Months Ended September 30, 2024 and 2023
| 9M24 · 9M23 · % Change | ||||||
|---|---|---|---|---|---|---|
| Net Sales | $30,976 | $29,868 | 3.7 | |||
| Cost of products sold, excluding amortization expense | 13,764 | 13,419 | 2.6 | |||
| Amortization of intangible assets | 1,413 | 1,485 | (4.9) | |||
| Research and development | 2,095 | 2,041 | 2.6 | |||
| Selling, general, and administrative | 8,790 | 8,225 | 6.9 | |||
| Total Operating Cost and Expenses | 26,062 | 25,170 | 3.5 | |||
| Operating Earnings | 4,914 | 4,698 | 4.6 | |||
| Interest expense, net | 170 | 182 | (6.4) | |||
| Net foreign exchange (gain) loss | (17) | 17 | n/m | |||
| Other (income) expense, net | (222) | (370) | n/m | |||
| Earnings before taxes | 4,983 | 4,869 | 2.3 | |||
| Taxes on earnings | 810 | 740 | 9.6 | 1) | ||
| Net Earnings | $4,173 | $4,129 | 1.0 | |||
| Net Earnings excluding Specified Items, as described below | $5,851 | $5,708 | 2.5 | 2) | ||
| Diluted Earnings per Common Share | $2.38 | $2.35 | 1.3 | |||
| Diluted Earnings per Common Share,excluding Specified Items, as described below | $3.33 | $3.25 | 2.5 | 2) | ||
| Average Number of Common Shares OutstandingPlus Dilutive Common Stock Options | 1,749 | 1,750 | ||||
NOTES:
See tables on page 14 for an explanation of certain non-GAAP financial information.
n/m = Percent change is not meaningful.
See footnotes on the following page.
1)2024 Taxes on Earnings includes the recognition of approximately $35 million of net tax expense as a result of the resolution of various tax positions related to prior years.
2023 Taxes on Earnings includes the recognition of approximately $59 million of net tax expense as a result of the resolution of various tax positions related to prior years.
2)2024 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $1.678 billion, or $0.95 per share, for intangible amortization, charges related to intangible impairment, charges related to restructuring and cost reduction initiatives, expenses associated with acquisitions and a divestiture, and other net expenses.
2023 Net Earnings and Diluted Earnings per Common Share, excluding Specified Items, excludes net after-tax charges of $1.579 billion, or $0.90 per share, for intangible amortization, charges related to restructuring and cost reduction initiatives, expenses associated with acquisitions and other net expenses.
Non-GAAP Reconciliation of Financial Information
Third Quarter Ended September 30, 2024 and 2023
| 3Q24 | |||
|---|---|---|---|
| AsReported (GAAP) | Specified Items | AsAdjusted | |
| Intangible Amortization | $470 | $(470) | $— |
| Gross Margin | 5,467 | 516 | 5,983 |
| R&D | 713 | (19) | 694 |
| SG&A | 2,895 | (5) | 2,890 |
| Other (income) expense, net | (121) | (12) | (133) |
| Earnings before taxes | 1,940 | 552 | 2,492 |
| Taxes on Earnings | 294 | 79 | 373 |
| Net Earnings | 1,646 | 473 | 2,119 |
| Diluted Earnings per Share | $0.94 | $0.27 | $1.21 |
Specified items reflect intangible amortization expense of $470 million and other net expenses of $82 million associated with charges related to intangible impairment, acquisitions, a divestiture and other net expenses. See page 17 for additional details regarding specified items.
| 3Q23 | |||
|---|---|---|---|
| AsReported (GAAP) | Specified Items | AsAdjusted | |
| Intangible Amortization | $496 | $(496) | $— |
| Gross Margin | 5,042 | 542 | 5,584 |
| R&D | 672 | (46) | 626 |
| SG&A | 2,723 | (43) | 2,680 |
| Other (income) expense, net | (83) | (23) | (106) |
| Earnings before taxes | 1,671 | 654 | 2,325 |
| Taxes on Earnings | 235 | 90 | 325 |
| Net Earnings | 1,436 | 564 | 2,000 |
| Diluted Earnings per Share | $0.82 | $0.32 | $1.14 |
Specified items reflect intangible amortization expense of $496 million and other net expenses of $158 million associated with restructuring actions, costs associated with acquisitions and other net expenses. See page 18 for additional details regarding specified items.
Non-GAAP Reconciliation of Financial Information
Nine Months Ended September 30, 2024 and 2023
| 9M24 | |||
|---|---|---|---|
| AsReported (GAAP) | Specified Items | AsAdjusted | |
| Intangible Amortization | $1,413 | $(1,413) | $— |
| Gross Margin | 15,799 | 1,540 | 17,339 |
| R&D | 2,095 | (81) | 2,014 |
| SG&A | 8,790 | (96) | 8,694 |
| Other (income) expense, net | (222) | (183) | (405) |
| Earnings before taxes | 4,983 | 1,900 | 6,883 |
| Taxes on Earnings | 810 | 222 | 1,032 |
| Net Earnings | 4,173 | 1,678 | 5,851 |
| Diluted Earnings per Share | $2.38 | $0.95 | $3.33 |
Specified items reflect intangible amortization expense of $1.413 billion and other net expenses of $487 million associated with restructuring actions, acquisitions, a divestiture and other net expenses. See page 19 for additional details regarding specified items.
| 9M23 | |||
|---|---|---|---|
| AsReported (GAAP) | Specified Items | AsAdjusted | |
| Intangible Amortization | $1,485 | $(1,485) | $— |
| Gross Margin | 14,964 | 1,591 | 16,555 |
| R&D | 2,041 | (144) | 1,897 |
| SG&A | 8,225 | (67) | 8,158 |
| Other (income) expense, net | (370) | 34 | (336) |
| Earnings before taxes | 4,869 | 1,768 | 6,637 |
| Taxes on Earnings | 740 | 189 | 929 |
| Net Earnings | 4,129 | 1,579 | 5,708 |
| Diluted Earnings per Share | $2.35 | $0.90 | $3.25 |
Specified items reflect intangible amortization expense of $1.485 billion and other net expenses of $283 million associated with restructuring actions, costs associated with acquisitions and other expenses. See page 20 for additional details regarding specified items.
A reconciliation of the third-quarter tax rates for 2024 and 2023 is shown below:
| ($ in millions) | Pre-TaxIncome | Taxes onEarnings | TaxRate |
|---|---|---|---|
| As reported (GAAP) | $1,940 | $294 | 15.2% |
| Specified items | 552 | 79 | |
| Excluding specified items | $2,492 | $373 | 15.0% |
| ($ in millions) | Pre-TaxIncome | Taxes onEarnings | TaxRate |
|---|---|---|---|
| As reported (GAAP) | $1,671 | $235 | 14.0% |
| Specified items | 654 | 90 | |
| Excluding specified items | $2,325 | $325 | 14.0% |
A reconciliation of the year-to-date tax rates for 2024 and 2023 is shown below:
| ($ in millions) · Pre-TaxIncome · Taxes onEarnings · TaxRate | ||||
|---|---|---|---|---|
| As reported (GAAP) | $4,983 | $810 | 16.3% | 1) |
| Specified items | 1,900 | 222 | ||
| Excluding specified items | $6,883 | $1,032 | 15.0% | |
| ($ in millions) · Pre-TaxIncome · Taxes onEarnings · TaxRate | ||||
|---|---|---|---|---|
| As reported (GAAP) | $4,869 | $740 | 15.2% | 2) |
| Specified items | 1,768 | 189 | ||
| Excluding specified items | $6,637 | $929 | 14.0% | |
1)2024 Taxes on Earnings includes the recognition of approximately $35 million of net tax expense as a result of the resolution of various tax positions related to prior years.
2)2023 Taxes on Earnings includes the recognition of approximately $59 million of net tax expense as a result of the resolution of various tax positions related to prior years.
Non-GAAP Revenue Reconciliation
Third Quarter and Nine Months Ended September 30, 2024 and 2023
($ in millions)
| 3Q24 · 3Q23 · % Change vs. 3Q23 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Non-GAAP | |||||||||
| Abbott Reported | Impact from business exit (b) | Adjusted Revenue | Abbott Reported | Impact from business exit (b) | Adjusted Revenue | Reported | Adjusted | Organic | |
| Total Company | 10,635 | (5) | 10,630 | 10,143 | (17) | 10,126 | 4.9 | 5.1 | 7.6 |
| U.S. | 4,202 | (5) | 4,197 | 3,817 | (17) | 3,800 | 10.1 | 10.4 | 10.4 |
| Intl | 6,433 | — | 6,433 | 6,326 | — | 6,326 | 1.7 | 1.7 | 5.8 |
| Total Nutrition | 2,066 | (5) | 2,061 | 2,073 | (17) | 2,056 | (0.3) | 0.3 | 3.4 |
| U.S. | 950 | (5) | 945 | 860 | (17) | 843 | 10.4 | 11.9 | 11.9 |
| Intl | 1,116 | — | 1,116 | 1,213 | — | 1,213 | (7.9) | (7.9) | (2.6) |
| Adult Nutrition | 1,111 | (5) | 1,106 | 1,072 | (17) | 1,055 | 3.6 | 4.7 | 9.1 |
| U.S. | 382 | (5) | 377 | 354 | (17) | 337 | 7.9 | 11.5 | 11.5 |
| Intl | 729 | — | 729 | 718 | — | 718 | 1.5 | 1.5 | 8.0 |
| Total Medical Devices | 4,747 | — | 4,747 | 4,249 | — | 4,249 | 11.7 | 11.7 | 13.3 |
| U.S. | 2,216 | — | 2,216 | 1,940 | — | 1,940 | 14.2 | 14.2 | 14.2 |
| Intl | 2,531 | — | 2,531 | 2,309 | — | 2,309 | 9.6 | 9.6 | 12.5 |
| Vascular | 699 | — | 699 | 672 | — | 672 | 3.9 | 3.9 | 4.9 |
| U.S. | 258 | — | 258 | 251 | — | 251 | 2.8 | 2.8 | 2.8 |
| Intl | 441 | — | 441 | 421 | — | 421 | 4.5 | 4.5 | 6.2 |
| 9M24 · 9M23 · % Change vs. 9M23 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Non-GAAP | ||||||||||
| Abbott Reported | Impact of acquisition (a) | Impact from business exit (b) | Adjusted Revenue | Abbott Reported | Impact from business exit (b) | Adjusted Revenue | Reported | Adjusted | Organic | |
| Total Company | 30,976 | (57) | (13) | 30,906 | 29,868 | (32) | 29,836 | 3.7 | 3.6 | 6.6 |
| U.S. | 11,982 | (53) | (13) | 11,916 | 11,503 | (32) | 11,471 | 4.2 | 3.9 | 3.9 |
| Intl | 18,994 | (4) | — | 18,990 | 18,365 | — | 18,365 | 3.4 | 3.4 | 8.3 |
| Total Nutrition | 6,284 | — | (13) | 6,271 | 6,116 | (32) | 6,084 | 2.7 | 3.1 | 6.2 |
| U.S. | 2,761 | — | (13) | 2,748 | 2,553 | (32) | 2,521 | 8.1 | 9.0 | 9.0 |
| Intl | 3,523 | — | — | 3,523 | 3,563 | — | 3,563 | (1.1) | (1.1) | 4.2 |
| Adult Nutrition | 3,261 | — | (13) | 3,248 | 3,167 | (32) | 3,135 | 3.0 | 3.7 | 8.1 |
| U.S. | 1,115 | — | (13) | 1,102 | 1,081 | (32) | 1,049 | 3.2 | 5.0 | 5.0 |
| Intl | 2,146 | — | — | 2,146 | 2,086 | — | 2,086 | 2.8 | 2.8 | 9.7 |
| Total Medical Devices | 13,934 | (57) | — | 13,877 | 12,444 | — | 12,444 | 12.0 | 11.6 | 13.2 |
| U.S. | 6,435 | (53) | — | 6,382 | 5,631 | — | 5,631 | 14.3 | 13.3 | 13.3 |
| Intl | 7,499 | (4) | — | 7,495 | 6,813 | — | 6,813 | 10.1 | 10.0 | 13.1 |
| Vascular | 2,112 | (57) | — | 2,055 | 2,004 | — | 2,004 | 5.4 | 2.6 | 3.9 |
| U.S. | 787 | (53) | — | 734 | 733 | — | 733 | 7.4 | 0.1 | 0.1 |
| Intl | 1,325 | (4) | — | 1,321 | 1,271 | — | 1,271 | 4.2 | 3.9 | 6.0 |
(a) Abbott completed the acquisition of CSI on April 27, 2023. For purposes of calculating organic sales growth, the impact from this acquired business has been excluded from January through April 2024.
(b) Reflects the impact of discontinuing the ZonePerfect® product line in the Nutrition business. This action was initiated in March 2024.
Third Quarter Ended September 30, 2024
| Acquisition orDivestiture-related (a) · Restructuringand CostReductionInitiatives (b) · IntangibleAmortization · Other (c) · TotalSpecifieds | ||||||
|---|---|---|---|---|---|---|
| Gross Margin | $— | $2 | $470 | $44 | $516 | |
| R&D | — | — | — | (19) | (19) | |
| SG&A | (7) | 2 | — | — | (5) | |
| Other (income) expense, net | (5) | — | — | (7) | (12) | |
| Earnings before taxes | $12 | $— | $470 | $70 | 552 | |
| Taxes on Earnings (d) | 79 | |||||
| Net Earnings | $473 | |||||
| Diluted Earnings per Share | $0.27 | |||||
The table above provides additional details regarding the specified items described on page 13.
a)Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating acquired businesses.
c)Other includes incremental costs to comply with the European Union's Medical Device Regulations (MDR) and In Vitro Diagnostics Medical Device Regulations (IVDR) requirements for previously approved products and investment and intangible asset impairment charges.
d)Reflects the net tax benefit associated with the specified items.
Third Quarter Ended September 30, 2023
| Acquisition orDivestiture-related (a) · Restructuringand CostReductionInitiatives (b) · IntangibleAmortization · Other (c) · TotalSpecifieds | ||||||
|---|---|---|---|---|---|---|
| Gross Margin | $3 | $19 | $496 | $24 | $542 | |
| R&D | (1) | (13) | — | (32) | (46) | |
| SG&A | (22) | (22) | — | 1 | (43) | |
| Other (income) expense, net | 5 | — | — | (28) | (23) | |
| Earnings before taxes | $21 | $54 | $496 | $83 | 654 | |
| Taxes on Earnings (d) | 90 | |||||
| Net Earnings | $564 | |||||
| Diluted Earnings per Share | $0.32 | |||||
The table above provides additional details regarding the specified items described on page 13.
a)Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating acquired businesses, as well as legal and other costs related to business acquisitions.
c)Other includes incremental costs to comply with the European Union's Medical Device Regulations (MDR) and In Vitro Diagnostics Medical Device Regulations (IVDR) requirements for previously approved products and charges for intangible asset impairments.
d)Reflects the net tax benefit associated with the specified items.
Nine Months Ended September 30, 2024
| Acquisition orDivestiture-related (a) · Restructuringand CostReductionInitiatives (b) · IntangibleAmortization · Other (c) · TotalSpecifieds | ||||||
|---|---|---|---|---|---|---|
| Gross Margin | $2 | $76 | $1,413 | $49 | $1,540 | |
| R&D | (4) | (1) | — | (76) | (81) | |
| SG&A | (32) | (17) | — | (47) | (96) | |
| Other (income) expense, net | (140) | — | — | (43) | (183) | |
| Earnings before taxes | $178 | $94 | $1,413 | $215 | 1,900 | |
| Taxes on Earnings (d) | 222 | |||||
| Net Earnings | $1,678 | |||||
| Diluted Earnings per Share | $0.95 | |||||
The table above provides additional details regarding the specified items described on page 14.
a)Includes the loss on the sale of a non-core business. Acquisition-related expenses include integration costs, which represent incremental costs directly related to integrating acquired businesses, as well as other costs related to business acquisitions.
c)Other includes incremental costs to comply with the MDR and IVDR regulations for previously approved products and charges for investment and intangible asset impairments.
d)Reflects the net tax benefit associated with the specified items and tax expense as a result of the resolution of various tax positions related to prior years.
Nine Months Ended September 30, 2023
| Acquisition orDivestiture-related (a) · Restructuringand CostReductionInitiatives (b) · IntangibleAmortization · Other (c) · TotalSpecifieds | ||||||
|---|---|---|---|---|---|---|
| Gross Margin | $15 | $51 | $1,485 | $40 | $1,591 | |
| R&D | (13) | (5) | — | (126) | (144) | |
| SG&A | (43) | (28) | — | 4 | (67) | |
| Other (income) expense, net | 46 | — | — | (12) | 34 | |
| Earnings before taxes | $25 | $84 | $1,485 | $174 | 1,768 | |
| Taxes on Earnings (d) | 189 | |||||
| Net Earnings | $1,579 | |||||
| Diluted Earnings per Share | $0.90 | |||||
The table above provides additional details regarding the specified items described on page 14.
a)Acquisition-related expenses include legal and other costs related to business acquisitions as well as integration costs, which represent incremental costs directly related to integrating acquired businesses.
c)Other includes incremental costs to comply with the MDR and IVDR regulations for previously approved products and charges for intangible asset impairments.
d)Reflects the net tax benefit associated with the specified items and tax expense as a result of the resolution of various tax positions related to prior years.
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