Abbott Laboratories

Good morning and thank you for standing by. Welcome to Abbott's second quarter 2022 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 one keys on your touchtone phone. 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, Chairman and Chief Executive Officer, 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 2022. Abbott cautions that these forward-looking statements are subject to risks and uncertainties 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, 2021. 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. 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 comparable GAAP financial measures in our earnings news release and regulatory filings from today. which are available on our website at abbott.com. Note that Abbott has not provided the GAAP financial measure for organic sales growth on a forward-looking basis because the company is unable to predict future changes in foreign exchange rates, which could impact reported sales growth. 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 results of another strong quarter. Earnings per share were $1.43, reflecting more than 20% growth compared to last year. Sales increased nearly 14.5% on an organic basis in the quarter, led by growth in established pharmaceuticals, diagnostics, and medical devices. Based on our performance through the first six months, we increased our earnings per share guidance to at least $4.90 for the full year. This speaks to the strength and resilience of our diversified healthcare model, as well as strong execution in this challenging macro environment. We've continued to advance our R&D pipeline and strengthen our long-term growth platforms with several new product approvals. Our supply chain has remained resilient and our financial health remains strong. I'll now summarize our second quarter results in more detail before turning the call over to Bob. I'll start with established pharmaceuticals, or EPD, where sales increased more than 9% in the quarter. Strong performance this quarter was led by double-digit growth across several countries, including China, Brazil, Colombia, Mexico, and Vietnam. EPD continues to execute and perform at a very high level in a dynamic environment, achieving double-digit organic sales growth over the past year and a half, including more than 11% organic growth for the first half of this year. Moving to diagnostics, where sales grew over 35% in the quarter. COVID test sales were $2.3 billion in the quarter, more than 95% of which came from rapid tests, including BinaxNOW in the U.S., PanBio internationally, and IDNOW globally. As we had predicted some time ago, rapid testing has become widely accepted and has proven to be a very important tool in combating the virus due to its affordability and accessibility, including at-home testing. And while vaccines have been shown to play an important role in reducing severity of outcomes, With the emergence of new variants that escape immunity, rapid tests have become the best tool we have to help people quickly and easily identify new cases in quarantine to help slow and prevent transmission. As you know, forecasting COVID testing demand beyond the near term has been challenging. As such, our forecast for the next few months contemplates a modest approaching endemic-like amount of testing sales. We are in regular discussions with governments around the world, including the U.S., for surveillance testing needs and to ensure capacity is available and ready if we see another surge this winter. If that were to happen, we have a lot of manufacturing capacity in the U.S. and internationally to help meet testing needs. I'll now turn to nutrition. As you know, we initiated a voluntary recall in February of certain infant formula products manufactured at one of our U.S. facilities. Earlier this month, we resumed partial production at that facility, starting with our specialty formula Elecare and metabolic formulas. We are in the final phases of testing to restart Similac production. As a reminder, once we begin production, it takes several weeks for product to reach store shelves. That said, we will do everything possible to accelerate delivery of product to retailers so families can have access to the formula they need as soon as possible. We've already started to see some share recovery at retail over the past couple of months as we leveraged our global manufacturing network to increase supply to the US, including importing product from our FDA-registered plant in Ireland. We also began importing product from Spain after receiving informed discretion from the FDA that expanded the allowance for imports. As I said in April, it's important to note that the results of the investigation from the FDA, CDC, and Abbott concluded no evidence linked our formulas to any infant illnesses or deaths, and there is no new information to suggest otherwise. We take this matter very seriously, and we're making a number of enhancements to our operations at the impacted manufacturing plant. We're also taking steps across our manufacturing network to expand capacity and redundancy. We're committed to set the standard in industry on quality and safety and to re-earn the trust of the families that depend on us. Across our broader nutrition business, global sales in adult nutrition increased 5% and a quarter, including more than 7.5% growth internationally, led by our market-leading Ensure and Glucerna brands. Lastly, I'll wrap up with medical devices, where sales grew 7.5% in the quarter. In cardiovascular devices, sales growth was led by structural heart and heart failure. While cardiovascular procedure trends continued to improve, growth in the quarter was somewhat more modest than what we had anticipated back in April due to several factors, most notably healthcare staffing challenges, COVID surges and lockdowns in China that were implemented as part of their efforts to control the spread of the virus. We expect these dynamics to improve in the second half of the year. In diabetes care, sales of Freestyle Libre grew more than 25% on an organic basis in the quarter, and our user base now exceeds 4 million users globally. During the quarter, we continue to strengthen our medical device portfolio. with innovative new products, most notably U.S. FDA clearance of our Freestyle Libre 3 continuous glucose monitoring system, which is the world's smallest and thinnest wearable glucose sensor that provides results with the highest level of accuracy in the industry. And U.S. approval of Avere, our leadless pacemaker for the management of slow heart rhythms. AVERA was specifically designed to be retrievable if the device ever needs to be removed and expandable to a dual chamber device, which is currently under development if the therapy needs evolve over time. So in summary, our diversified healthcare model continues to prove highly resilient in a dynamic macro environment. We're achieving strong growth across several areas of the portfolio. and making good progress restarting our nutrition manufacturing facility. And as a result of our strong performance through the first six months, we're raising our EPS guidance for the year. I'll now turn over the call to Bob.