Abbott Laboratories

Good morning, and thank you for standing by. Welcome to Abbott's fourth 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 and reference the 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 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'll 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 2021. Abbott cautions that these forward-looking statements are subject to risks and uncertainties, including the impact of 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 in item 1A risk factors in our quarterly report on form 10Q 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 development 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 growth 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 another highly successful year for Abbott during what's been the single most disruptive healthcare event in our lifetimes. For the full year, we reported organic sales growth of nearly 10% and ongoing earnings per share of $3.65, which reflects double-digit growth and is at the upper end of our guidance range we set last January when we were expecting a normal economy. Performance like this after the pandemic struck is a real achievement and demonstrates the strength of our diversified business model. In normal times, it maximizes our growth opportunities, and during the pandemic, it's been tested by a global crisis and proven to be highly resilient. It should come as no surprise that our performance was led by our diagnostics business. COVID-19 dominated the year for us and the world, and our primary response came in the form of diagnostic tests to identify the virus. In total, we delivered more than 400 million COVID tests since the start of the pandemic, including more than 300 million tests in the fourth quarter alone. But as we discussed before, the year was not all diagnostics and COVID. Our more consumer facing businesses, nutrition, diabetes care, and established pharmaceuticals all contribute growth for the year. And we continue to launch an impressive stream of innovations across our businesses. I'll touch on some of these new products in more detail in just a moment. We exited 2020 with tremendous momentum, including total sales growth of more than 28% and ongoing earnings per share growth of more than 50% in the fourth quarter. Turning to 2021, we're forecasting another year of top-tier performance. As we announced this morning, we forecast ongoing earnings per share of at least $5 in 2021, reflecting growth of more than 35% compared to last year. And because we're building on top of our strong 2020 performance, our forecasted 2021 earnings per share is more than 50% higher than our pre-pandemic EPS in 2019, which is highly unique and differentiated in this environment. I'll now provide more details on our 2020 results before turning over the call to Bob. And I'll start with nutrition. where sales increased around 4.5% for both the fourth quarter and full year. Strong growth of Ensure, our market-leading complete and balanced nutrition brand, and Glucerna, our leading diabetes nutrition brand, led to double-digit growth in adult nutrition for both the quarter and full year. In pediatric nutrition, U.S. sales growth of more than 5% last year was led by increased market share of Similac, our market-leading infant formula brand. International pediatric nutrition sales continue to be impacted by challenging market conditions in greater China. During the past year, we continued to expand our nutrition portfolio with several new product and line extensions, including the continued rollout of infant formula products across our Similac brand family that contain human oligosaccharide, or HMO, which supports a healthy immune system. Global expansion of our PediaSure, Glucerna, and Ensure brands, including the continued rollout of Ensure high-protein products. And the launch of four new Pedialyte rehydration products, Pedialyte Zero Sugar, Sport, Organic, and Immune Support. For 2021, we're forecasting similar sales growth for our global nutrition business and a continued strong cadence of new product introductions. turning to medical devices where sales were relatively flat in the fourth quarter. Strong double-digit growth in diabetes care was offset by lower sales in our cardiovascular and neuromodulation businesses due to challenging conditions as COVID case rates surge in certain geographies towards the end of the quarter. As we saw throughout last summer and fall, we expect procedure volumes to improve in these businesses as COVID case rates subside. In diabetes care, sales grew nearly 30% for the fourth quarter and full year, led by Freestyle Libre, our market-leading continuous glucose monitoring system. In the U.S., Libre sales grew 50% last year, and outside the U.S., Libre sales grew 40%, surpassing $2 billion of international sales for the full year 2020. This past year was possibly our most productive ever in terms of new product approvals and launches across our medical device portfolio. Let me touch on a handful. First, the approval of MitraClip Gen 4, the latest generation of our market-leading system to repair a leaky mitral heart valve. Just last week in the U.S., Medicare expanded reimbursement coverage for MitraClip, which significantly expands the eligible patient population that can benefit from this life-changing technology. CE Mark of Tendine, a first-of-its-kind minimally invasive device to replace a faulty mitral valve, and the CE Mark of TriClip are minimally invasive clip technology to repair a leaky tricuspid heart valve. Long considered the forgotten valve, TriClip brings an important new solution to patients that have previously had very few treatment options. Abbott now offers minimally invasive device therapies for three valves in the heart, the aortic, the mitral, and the tricuspid valves. We also launched two cardiac rhythm defibrillation products under our Gallant brand that include Bluetooth capabilities to align with our strategy in remote monitoring and digitally connected care. Also saw the approval of InsightX, our next generation 3D cardiac mapping technology. And U.S. approval of Freestyle Libre 2 and CE Mark for Libre 3, the latest generations of our market-leading continuous glucose monitoring systems. And CE Mark of Libre Sense Glucose Sport, the first product in our strategy to expand use of our wearable biosensor technology into mass market opportunities beyond diabetes. As you can see, It was a highly productive year for our pipeline, and quite frankly, there's even more I could highlight. In 2021, we're forecasting continued strong double-digit growth in our diabetes care business, led by Freestyle Libre, and steady improvements in our cardiovascular and neuromodulation businesses, fueled by the continued business recovery the society works its way through COVID-19, and on the strength of our recent and upcoming new product launches. Moving to established pharmaceuticals, or EPD, where sales increased 3.5% in the fourth quarter, reflecting sequential improvement versus the prior quarter. Despite COVID, EPD sales increased 2% overall in 2020, demonstrating the resilience of our business model, even in this challenging environment. Growth this past year was led by sales in India, Russia, China, and Brazil. During the year, EPD continued to strengthen its portfolio with more than 50 new product launches across our key emerging markets. As we've discussed before, new product introductions in EPD are more incremental in nature, and the steady cadence of portfolio expansion and refreshment we're achieving is an important element of our sustainable growth strategy. We forecast demand and growth rate improvements in EPD during 2021, as well as a continued steady cadence of new product introductions that will contribute to growth. And I'll wrap up with our diagnostic business, where sales grew nearly 110% in the quarter, driven by $2.4 billion of COVID testing-related sales. We realized very early that a variety of different testing solutions would be required to tackle the pandemic. With that understanding, starting last March, we developed and launched an entire portfolio of tests to target the virus. The biggest contribution in the fourth quarter came from our rapid lateral flow test to detect the virus, which includes BinaxNOW in the U.S. and PanBio internationally. These are highly portable, reliable, and affordable tests, and in just 15 minutes can detect if someone is infectious without the use of an instrument, which means the test can be performed in virtually any setting, such as physician office, pharmacies, urgent care centers, workplace settings, and even at home. As part of our pandemic response efforts, we also developed and launched a digital solution that pairs with these tests called Navica, which allows people to receive and display test results on their mobile devices. But our efforts didn't stop at developing these tests. We also ramped up manufacturing capacity on a massive scale and now producing more than 100 million of these two tests combined per month. While our COVID testing efforts have clearly received a lot of attention, we've also remained focused on the launch and rollout of Alinity, our suite of innovative diagnostic instruments. We continue to retain existing businesses and capture share at strong rates. And we continue to build on our test menus for these instruments. Last year, we initiated the U.S. launch of Alinity M for molecular testing. This launch included a COVID test, which helped jumpstart demand for this innovative, highly automated, and differentiated molecular testing platform. And earlier this month, we announced U.S. FDA clearance for the first rapid handheld blood test for concussions. This test measures certain biomarkers found in blood after a head trauma event and produces a result within 15 minutes after a plasma sample is inserted in our iStatalinity handheld device. Building on this initial clearance, we're also working on a whole blood point of care test under FDA breakthrough designation. And our vision is to develop a 15-minute portable test that can be used in any settings where people might experience head injuries that require quick evaluation. So in summary, Despite the challenging environment, we achieved the upper end of the EPS range we set last January before anyone knew the extent of the COVID pandemic, demonstrating the strength resilience of our diversified business model and our superior execution. Our new product pipeline continues to be incredibly productive, delivering groundbreaking innovations and a steady cadence of important new products with more on the horizon. We continue to lead in the area of diagnostic testing for COVID, which is helping to fight the virus and accelerating our long-term decentralized testing strategy. And we're forecasting more than 35% adjusted EPS growth in 2021, which is truly unique in this environment. I'll now turn over the call to Bob.