Abbott Laboratories

Good morning and thank you for standing by. Welcome to Abbott's fourth quarter 2024 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. Mike Camilla, Vice President, Investor Relations.

Good morning, and thank you for joining us. With me today are Robert Ford, Chairman and Chief Executive Officer, and Phil Boudreau, Executive Vice President, Finance, and Chief Financial Officer. Robert and Phil 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 2025. Abbott cautions that these forward-looking statements are subject to risk 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 31, 2023. 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 related GAAP financial measures on a forward-looking basis for the non-GAAP financial measures for which the company is providing guidance because the company is unable to predict with reasonable certainty and without unreasonable effort the timing and impact of certain items which could significantly impact Abbott's results in accordance with GAAP. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which is defined in the press release issued earlier today. With that, I will now turn the call over to Robert.

Thanks, Mike. Good morning, everyone, and thank you for joining us. First, I want to express gratitude to my Abbott colleagues around the world whose hard work and passion are the driving forces of Abbott's continued success. Abbott's commitment to innovation, operational excellence, and serving the needs of our customers resulted in another year of exceptional performance, which included achieving sales growth of 9.5% excluded COVID testing, delivering 70 basis points of gross margin profile improvement, driving acceleration in the growth of our earnings per share throughout the year, and developing and advancing new products through our rich pipeline. The strong performance resulted in generating $8.5 billion of operating cash flow, which was used to reinvest in the business, fund capacity expansions, repay debt, and return $5 billion to shareholders in the form of dividends and share repurchases. These accomplishments played a key role in continuing our well-established track record for delivering on our financial commitments which included achieving results that finished at the high end of our initial guidance ranges we provided for 2024. These results included exiting the year with a very strong momentum as fourth quarter sales grew 10 percent, excluded COVID testing sales, and adjusted earnings per share increased 13 percent versus the prior year. For 2025, we're well positioned to deliver another year of strong growth. As we announced this morning, we forecast organic sales growth to be in the range of 7.5% to 8.5% and adjusted earnings per share to be in the range of $5.05 to $5.25, which reflects double-digit growth at the midpoint. I'll now summarize our fourth quarter results in more detail before turning the call over to Phil. I'll start with nutrition. Our sales increased 7% in the quarter. Growth in the quarter was driven by double-digit growth in adult nutrition, led by our market-leading Ensure and Glucerna brands. We achieved a significant milestone last year, with annual sales of Ensure surpassing $3 billion. This achievement helped deliver another year of strong performance in adult nutrition, with annual sales of adult nutrition products growing 9% last year. This strong performance is a continuation of a well-established trend. The five-year compound annual growth rate in adult nutrition is 9%, which reflects the impact of our well-known and respected brands, favorable demographic trends, and the significant investments we've made to expand manufacturing capacity to serve the growing global demand for our products. Moving to diagnostics, where sales increased 6% excluded COVID testing sales. Growth in the quarter was led by rapid diagnostics, where excluded COVID testing sales increased 16% in the quarter. This was driven by strong demand for our portfolio of respiratory disease tests used to help diagnose influenza, strep throat, and RSV. In core laboratory diagnostics, growth of 4% was driven by continued strong demand for our market-leading immunoassay clinical chemistry, hematology, and blood screening testing panels. Excluding the impact of challenging market dynamics in China, the combined growth in all other markets was double digits in the quarter. Turning to EPD, where sales increased 8.5% in the quarter, Growth was well balanced across markets and therapeutic areas that we participate in, including gastroenterology, women's health, CNS, and pain management. EPD also delivered broad-based growth across the markets we serve, including double digit growth in several countries across Latin America, Southeast Asia, and the Middle East. By focusing on the therapies most needed In these faster-growing markets, we continue to sustain our long track record of delivering strong growth, which includes a five-year compound annual growth rate for EPD of 8%. And I'll wrap up with medical devices, where sales grew 14%. In diabetes care, sales of continuous glucose monitors were $1.8 billion in the quarter, and grew 23%. For the full year 2024, sales of continuous glucose monitors were approximately $6.5 billion and grew 22%. This included growth of 27% in the U.S. where our market share on a revenue basis has increased by more than 10 share points over the last three years. In electrophysiology, growth of 9% was well balanced across the U.S. and international markets. As expected, growth in the quarter was impacted by a challenging comparison versus the prior year where we saw a sharp increase in demand for our end site cardiac mapping systems as customers prepared for the launch of PFA catheters. Excluding the impact of this prior year comparison dynamic, growth would have been double digits globally, in the US and internationally. In structural heart, growth of 23% was driven by strong performance across our market leading portfolio of surgical valves, structural interventions, and transcatheter repair and replacement products. Structural heart represents one of the most attractive areas in the field of medical technologies. It is an area that we have invested in heavily, and we're seeing those investments yield outstanding results. Our comprehensive portfolio of products drove an acceleration in sales growth in structural heart throughout the year. In rhythm management, growth of 7% was led by Avere, our innovative leadless pacemaker, and Assert, our newest implantable cardiac monitor, which we launched in the US last year. With growth of 7% for the full year, Our rhythm management business delivered another year of performance that far exceeded the market, and we expect that to continue this year. Last month, we announced that we completed the first in human implants of a new version of Aver specifically designed to deliver pacing to the left bundle branch area of the heart, activating the heart's natural conduction system. This highly innovative device currently in development was granted breakthrough designation by the FDA. In heart failure, growth of 9.5% was driven by our market-leading portfolio of heart assist devices, which offer treatment for chronic and temporary conditions. In vascular, growth of 7% was led by double-digit growth in vessel closure products, and growth from the spree are below the knee resorbable stent. And lastly, in neuromodulation, sales grew 8% driven by strong demand in international markets for our Eterna rechargeable spinal cord stimulation device. So in summary, we delivered another quarter of strong growth, with sales growing 10% and earnings per share growing 13%. For the year, we achieved the upper end of the initial guidance ranges we provided for 2024. We made great progress expanding our gross margin profile, and we expect that progress to continue into 2025 The pipeline continues to provide a steady cadence of new growth opportunities and we're well positioned to deliver another year of strong growth in 2025. And I'll turn over the call to Phil.