Abbott Laboratories

Good morning, and thank you for standing by. Welcome to Abbott's third quarter 2020 earnings conference call. All participants will be able to listen only until the question and answer portion of this call. During the question and answer session, you will be able to ask your question by pressing the star 1 keys on your touchtone phone. Should you become disconnected throughout this conference call, please redial the number provided to you in reference to Abbott earnings call. This call is being recorded by Abbott. With the exception of any participants' questions asked during the question and answer session, the entire call, including the question and answer session, is material copyrighted by Abbott. It cannot be recorded or rebroadcast without Abbott's express written permission. I would now like to introduce Mr. Scott Leinenweber, Vice President, Investor Relations, Licensing, and Acquisitions.

Good morning, and thank you for joining us. With me today are Robert Ford, President and Chief Executive Officer of and Bob Funk, Executive Vice President Finance and Chief Financial Officer. Robert and Bob will provide opening remarks. Following their comments, we will take your questions. Before we get started, some statements made today may be forward-looking for purposes of the Private Securities Litigation Reform Act of 1995, including the expected financial results for 2020. Abbott cautions that these forward-looking statements are subject to risk and uncertainties, including the impact of the COVID-19 pandemic on Abbott's operations and financial results that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in item 1A, risk factors. to our annual report on form 10 K for the year ended December 31st, 2019. And then item one, a risk factors in our quarterly report on form 10 Q for the quarter ended March 31st, 2020. Abbott undertakes no obligation to release publicly any revisions to forward looking statements as a result of subsequent events or developments, except as required by law. Please note that financial information provided on the call today for sales, EPS, and line items of the P&L will be for continuing operations only. On today's conference call, as in the past, non-GAAP financial measures will be used to help investors understand Abbott's ongoing business performance. These non-GAAP financial measures are reconciled with the comparable GAAP financial measures in our earnings news release, and regulatory filings from today, which are available on our website at abbott.com. Unless otherwise noted, our commentary on sales refers to organic sales growth, which excludes the impact of foreign exchange. With that, I will now turn the call over to Robert.

Thanks, Scott. Good morning, everyone, and thank you for joining us. Today, we reported organic sales growth of 10.5%. and ongoing earnings per share of 98 cents, which reflects high teens' growth versus the prior year. Based on our performance and momentum through the first nine months, along with our expectations for the remainder of the year, we increased our earnings per share guidance to at least $3.55 for the full year. This speaks to the strength and resilience of our diversified business model as well as our ability to innovate and deliver in this challenging environment. While the pandemic has created many new business dynamics, we've continued to invest in our growth platforms, and our pipeline continues to be highly productive, resulting in several new product launches and approvals this past quarter, including U.S. FDA emergency use authorization for our BinaxNOW rapid antigen test, which can detect COVID-19 infection in just 15 minutes with no instrument required. U.S. launch of Freestyle Libre 2, which sets a new standard of accuracy and performance in the market. CE Mark of Libre 3, which automatically delivers real-time glucose readings every minute in the world's smallest and thinnest wearable sensor. CE Mark of Libre Sense Glucose Sport Biosensor, our initial step to expand use of the Libre platform beyond diabetes. And finally, C-mark of MitraClip G4, the latest generation of our market-leading minimally invasive mitral heart valve repair device. I'll now summarize our third quarter results in more detail before turning the call over to Bob. And I'll start with nutrition, where sales increased 4% in the quarter. Growth was led by Ensure, our market-leading adult nutrition brand, which contains several ingredients to support a healthy immune system. We're seeing strong demand in both the US and internationally, which led to global adult nutrition growth of 12.5% in the third quarter. In pediatric nutrition, sales growth in the US was led by our market-leading Pedialyte rehydration brand, which is driven by market conditions and portfolio expansion. Internationally, growth in Southeast Asia was offset by continued challenging conditions in greater China. Moving to established pharmaceuticals or EPD, where sales declined 3%. During the quarter, we saw challenging market conditions in several countries due to the COVID pandemic. Whereas the virus had its biggest impact in developed countries during the second quarter, We saw it hit emerging markets more significantly this past quarter, which lowered market demand. Encouragingly, as we exited the quarter, we started to see signs of market recovery in several of those countries, and we expect we'll see a continued recovery curve going forward. I'll turn now to medical devices, which grew 2.5% in the quarter. We continue to see steady improvements in demand and procedure trends across our portfolio, which resulted in five of our seven businesses within medical devices achieving positive sales growth in the quarter, including electrophysiology, heart failure, structural heart, neuromodulation, and diabetes care. Growth in the quarter was led by diabetes care, where sales grew 25%, including more than 35% growth of Freestyle Libre. our market-leading continuous glucose monitoring system. As I mentioned earlier, during the third quarter, we launched Libre 2 in the U.S., which sets a new standard in the market with best-in-class accuracy and alarm performance, as well as 40% longer wear time compared to competitors. Although still early in the launch, customer feedback has been overwhelmingly positive. We also obtained C-Mark for Libre 3, which integrates Libre's leading accuracy and performance into the world's smallest, thinnest, disposable sensor, the size of just two stacked pennies, at the same affordable price as currently available versions of Libre. And in Europe, we also launched LibreSense Glucose Sport, which is our initial step in a very intentional approach to pursue mass market biosensor opportunities beyond diabetes. LibreSense allows athletes to monitor their glucose levels in order to learn how and when to best fuel with food and supplements to avoid fatigue and achieve peak performance. I'll wrap up with our diagnostics business, where sales grew nearly 40% in the quarter. As I mentioned during our last earnings call, our teams have worked tirelessly since the beginning of the pandemic to bring to market multiple COVID-19 tests across our diagnostic testing platforms. During the third quarter, we launched a new rapid antigen test called BinaxNOW, which is a disposable test about the size of a credit card that can determine if someone is infected with the virus within 15 minutes without the use of an instrument. Given the mass market need for testing, we knew that developing and launching this test was only half the equation, which is why we simultaneously built two new manufacturing facilities in the U.S. to help meet the public health need of testing as many people as possible, as often as possible, to help reduce the risk in the environment and slow the spread of the virus. To date, we've sold more than 100 million COVID tests across our diagnostic platforms, and we continue to pursue opportunities to further increase our manufacturing capacity to help meet the significant demand for testing around the world. So in summary, despite the challenging environment, We achieved double-digit organic sales growth and high teams EPS growth in the quarter. Our pipeline continues to be highly productive, resulting in several important new product launches and approvals during the quarter. We continue to lead in the area of diagnostic testing for COVID-19, which has added a significant new layer of growth for our business and accelerated our distributed testing strategy. And we've increased our full-year EPS guidance. which highlights the strength and resilience of our diversified business model. I'll now turn over the call to Bob.