Abbott Reports Strong Q3 Earnings Driven by Medical Devices, Narrows Full-Year Profit Guidance

Intelligent Finance APP learned that Abbott (ABT.US) announced better-than-expected third-quarter results due to growth in its medical device business for treating heart disease and diabetes, while narrowing its annual profit guidance. Data showed that Abbott's Q3 revenue was $10.1 billion, surpassing the analysts' average estimate of $9.8 billion. The adjusted earnings per share were $1.14, 4 cents higher than the analysts' expectations.

Looking ahead, the company forecasts full-year adjusted earnings per share to be between $4.42 and $4.46, compared to the previous guidance of $4.30 to $4.50, resulting in a midpoint increase to $4.44 per share, which is 5 cents above the analysts' average estimate.

After the earnings report was released, Abbott rose 2.56% in pre-market trading. As of Tuesday's close, the stock has fallen 16% year-to-date.

Before the earnings announcement, some analysts had believed that GLP-1 drugs used for treating diabetes and obesity would reduce the demand for medical devices such as blood glucose monitors. However, Abbott countered this claim, stating that these drugs could promote the use of devices like its FreeStyle Libre system, which helps diabetic patients monitor their blood sugar levels.

Abbott spokesperson Kate Dyer said in an email last month that drugs like Novo Nordisk's (NVO.US) Ozenpic could further expand the use of continuous glucose monitors, as doctors will combine the two for diabetes management and patients are looking for tools to support a healthy lifestyle. WW International (WW.US) has been using Abbott’s system to better monitor blood sugar levels in people with diabetes. Additionally, Abbott is developing a new wearable device called Lingo, which uses similar monitoring technology.

Nevertheless, the sales of pacemakers and other cardiac devices manufactured by Abbott may be impacted by GLP-1 drugs, as these medications reduced the risk of heart attacks and strokes in patients by 20% in a trial.

Bloomberg Intelligence analyst Matthew Henriksson said before the announcement of Abbott's earnings: "Market sentiment seems to suggest the worst-case scenario, where GLP drugs limit the need for all surgeries while patient demand for the drugs does not decrease."

Additionally, the decline in sales related to COVID-19 testing caused Abbott's Q3 revenue to decrease by 2.6% year-over-year. In 2022, the total sales related to COVID-19 testing were $8.368 billion. The company now expects that the total sales related to COVID-19 testing for the full year of 2023 will be approximately $1.5 billion.