Abbott Laboratories has maintained consistent 7.5% sales growth over the past eight quarters, with growth expected to climb to 8% on the strength of core products going into the final quarter of the year, CEO Miles White said on the device-maker's third-quarter earnings call.
Overall, the company pulled in sales of $8.1 billion worldwide in the third quarter, a 7.6% increase on an organic basis from the same quarter the previous year. The growth was a combination of a 10.6% rise in medical device sales — the company's largest business — 6.6% in diagnostics, 3.8% in nutrition and 7.9% in generic pharmaceuticals.
The growth in medical devices outside the company's flagship cardiovascular and neuromodulation products can largely be attributed to Abbott's glucose monitoring system Freestyle Libre, which saw organic sales growth of 68% from the previous year to $496 million. The device gained public reimbursement coverage in the Canadian provinces of Ontario and Quebec in the third quarter.
The company's entire diabetes care unit notched 33% organic sales growth in the quarter over the previous year.
"I think momentum here on Libre is exceptional — it is very strong," Abbott COO Robert Ford said on the Oct. 16 call. "As we go into Q4, I think we've got a lot of stuff going right, firing on all cylinders, whether it's commercial operation, whether it's our R&D program."
Abbott is expecting word from the U.S. Food and Drug Administration on the approval of its next generation of the diabetes device, called Freestyle Libre 2 iCGM, but the timeline from the agency has been pushed back. White expressed confidence in the product but echoed the impatience that investors and analysts have shown with regard to the upcoming approval.
"There's a lot to be encouraged about, and while I recognize a lot of people, including us, are feeling impatience, impatience doesn't translate to concern," White said. He went on to say that Abbott had "misjudged" the original timeline, and while he could not pinpoint the exact time of approval, the company is working with the agency.
In the third quarter, Abbott also gained U.S. approval for its new MitraClip device for mitral regurgitation, or leaking heart valve. Sales of the original version of the device grew more than 30% globally and almost 50% in the U.S.
Abbott narrowed its 2019 EPS guidance slightly while keeping the same midpoint of $3.24 per share. The company forecast double-digit growth in medical devices, and single-digit growth in diagnostics, nutrition and generics for the fourth quarter.
"In our view, the 3Q performance shows consistent strength, and we believe it will be sufficient to support the stock's momentum," Cowen analyst Joshua Jennings said in an Oct. 16 note.
White said the company is not considering any big deals on the M&A front outside of additions to its core business.
"We're pretty happy with our R&D pipeline, so our standards are pretty high right now about what's attractive and what may not be," White said. "But I'm not forecasting anything significant at all in the M&A area."
Abbott's board approved a $3 billion stock buyback a day before reporting earnings, the first in several years, according to White.
Emerging markets still strong
Abbott has focused on emerging markets for almost a decade, with continued growth in areas like India, Latin America and China, despite a modest slowdown recently, White said.
The areas where Abbott shows strongest performance in emerging markets are generics and nutrition. In nutrition, however, the company has faced challenges in China due to historically low birth rates.
"The advancement of healthcare systems, the advancement in demand for health products, pharmaceuticals, etc., is strong," White said.
He said the most difficult part of maintaining a business in emerging markets has been volatile currency, and because of the strength of the U.S. dollar at the moment, those effects have been more pronounced.