Abbott Laboratories

Good morning and thank you for standing by. Welcome to Abbott's third 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 1 1 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 AVID's operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10-K for the year ended December 31st, 2021. AVID 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 the 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, including ongoing earnings per share of $1.15. Based on our performance through the first nine months of the year, we increased our full-year adjusted earnings per share guidance to $5.17 to $5.23, which is more than 10% higher than the initial guidance flow we provided back in January. As you know, the macroeconomic conditions remain challenging. Inflation continues to be a stubborn force globally, but we've started to see some moderating impacts in certain areas of our businesses compared to earlier in the year. At the same time, the US dollar has continued to strengthen, including throughout the most recent quarter. COVID remains as unpredictable as ever, with intermittent surges continuing throughout the world. And lastly, global supply chain dynamics, staffing shortages continue to impact our healthcare markets, though we're seeing steady signs of improvements. Over the last few months, We've made progress in several important areas following the temporary shutdown of our infant formula manufacturing plant in Sturgis, Michigan, earlier this year. We restarted production at Sturgis in July with a focus on our Elecare and other specialty infant formulas. And in September, we began production of several Similac products, which we expect will begin to reach retail store shelves over the coming weeks. We also boosted production in our global network to increase infant formula supply to the U.S. In fact, we delivered roughly the same volume of formula to our U.S. customers this past quarter as we did during the three months prior to the recall. Our number one supply priority was to the WIC, Women, Infant, and Children Federal Food Assistance Program, to ensure that underserved participants would have access to infant formula. During the quarter, we also made leadership changes, both at our Sturgis site and in our Collier organization, and we concluded a month-long investigation into the accusations that were made by a former employee. The investigation, which included extensive document reviews and interviews, concluded that the allegations about quality were unfounded, and during the quarter, the same former employee dropped a federal OSHA complaint. And lastly, we conducted an analysis of the U.S. infant formula market and concluded that this country would benefit from more manufacturing capacity and redundancy. As such, we're moving forward with plans for a half billion dollar investment in a new U.S. nutrition facility for specialty and metabolic infant formulas. We're currently in the final stages of determining the site location, and we'll work with regulators and other experts to ensure this facility is state-of-the-art and sets a new standard for infant fulner production. We recognize there's more to do, but feel confident in the progress we're making, and I want to thank all the Abbott employees that have been working around the clock on this matter. I'll now summarize our third quarter results for our remaining businesses in more detail before turning the call over to Bob. And I'll start with established pharmaceuticals, or EPD, where sales increased more than 12% in the quarter. Strong performance was led by double-digit growth across several countries, including India, China, Brazil, and Vietnam. along with broad-based strength across several therapeutic areas. EPD has now achieved double-digit organic sales growth since the beginning of last year, fueled by a steady cadence of new product launches and strong commercial execution. And EPD has also expanded its profitability profile over the same time period, which is quite unique given the current macroeconomic headwinds. Moving to diagnostics, where COVID test sales of $1.7 billion were significantly higher than expectations, but lower compared to last year, which resulted in a modest decline in sales growth overall. The decline in COVID test sales compared to last year was driven by lower demand for laboratory-based tests, whereas demand for our rapid tests, which include BinaxNOW, PanBio, and IDNOW, continues to be strong, with sales this past quarter at a similar amount to the third quarter of last year. Rapid tests have proven to be very important and highly practical tools. They provide a quick and affordable way to test COVID almost anywhere and at any time, whether you're experiencing symptoms or just want to know your status before attending events or gatherings. Excluding COVID testing revenues sales of routine diagnostic tests grew 6% in the quarter overall and even faster internationally, fueled by the continued global rollout of our Alinity instrument for immunoassay, clinical chemistry, and molecular testing. Lastly, I'll wrap up with medical devices, where sales grew 6.5% in the quarter globally. In the U.S., sales growth of approximately 11.5% was led by strong double-digit growth in electrophysiology, structural heart, and diabetes care. During the quarter in the US, cardiovascular procedure volumes were somewhat soft in July before strengthening in August and September. Internationally, in addition to similar procedure volume trends, sales were negatively impacted by intermittent COVID lockdowns in China, as well as supply constraints in certain areas, most notably in electrophysiology. In diabetes care, sales of Freestyle Libre exceeded $1 billion in the quarter, and our user base expanded to approximately 4.5 million users globally. In the US, where sales grew more than 40%, we initiated the full launch of Libre 3 which automatically delivers up to the minute glucose readings with unsurpassed accuracy in the world's smallest and thinnest wearable sensor. Internationally, organic sales growth was impacted by a couple of transitory items, including supply constraints on Libre 1 in certain emerging markets, which we expect to improve over the next couple of months. And secondly, a strategic choice we made in Germany to rapidly transition our large existing user base for our latest generation Libre 3 system, which temporarily reduced our focus on new user additions during the quarter in that country. We already transitioned well over half of our users, with the vast majority of the remaining users expected to move to Libre 3 by year end. This move strategically fortifies our leadership position in the second largest continuous glucose monitoring market in the world and further enhances our already strong strategic position as we work to bring the benefits of Librate to more and more people, including those with type 2 diabetes that are not reliant on insulin to manage their disease. So in summary, despite the challenging environment, We achieved another strong quarter that significantly surpassed expectations, which reflects the strength of our diversified business model and execution. And based on our strong performance in the first nine months of the year, we're once again raising our EPS guidance for the year. I'll now turn over the call to Bob.