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| ||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
|
| ||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
An Illinois Corporation | I.R.S. Employer Identification No. | |||||
|
|
|
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||
Common Shares, Without Par Value |
| ABT |
|
|
| ||||||
Large Accelerated Filer | Accelerated Filer | |||||
|
|
| ||||
Non-Accelerated Filer |
| Smaller reporting company | ||||
|
|
| ||||
|
| Emerging growth company |
| | | | | | |
| | Three Months Ended | ||||
| | March 31 | ||||
|
| 2022 |
| 2021 | ||
Net sales | | $ | 11,895 | | $ | 10,456 |
| | | | | | |
Cost of products sold, excluding amortization of intangible assets | |
| 4,987 | |
| 4,401 |
Amortization of intangible assets | |
| 512 | |
| 509 |
Research and development | |
| 697 | |
| 654 |
Selling, general and administrative | |
| 2,787 | |
| 2,783 |
Total operating cost and expenses | |
| 8,983 | |
| 8,347 |
| | | | | | |
Operating earnings | |
| 2,912 | |
| 2,109 |
| | | | | | |
Interest expense | |
| 131 | |
| 135 |
Interest (income) | |
| (14) | |
| (11) |
Net foreign exchange (gain) loss | |
| (3) | |
| 3 |
Other (income) expense, net | |
| (78) | |
| (61) |
Earnings before taxes | |
| 2,876 | |
| 2,043 |
Taxes on earnings | |
| 429 | |
| 250 |
Net Earnings | | $ | 2,447 | | $ | 1,793 |
| | | | | | |
Basic Earnings Per Common Share | | $ | 1.38 | | $ | 1.00 |
| | | | | | |
Diluted Earnings Per Common Share | | $ | 1.37 | | $ | 1.00 |
| | | | | | |
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share | |
| 1,761,911 | |
| 1,776,842 |
Dilutive Common Stock Options | |
| 12,631 | |
| 14,661 |
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options | |
| 1,774,542 | |
| 1,791,503 |
| | | | | | |
Outstanding Common Stock Options Having No Dilutive Effect | | | 2,655 | |
| 2,694 |
Three Months Ended | |||||||||||
March 31 | |||||||||||
2023 | 2022 | ||||||||||
Net sales | $ | 9,747 | $ | 11,895 | |||||||
Cost of products sold, excluding amortization of intangible assets | 4,331 | 4,987 | |||||||||
Amortization of intangible assets | 491 | 512 | |||||||||
Research and development | 654 | 697 | |||||||||
Selling, general and administrative | 2,762 | 2,787 | |||||||||
Total operating cost and expenses | 8,238 | 8,983 | |||||||||
Operating earnings | 1,509 | 2,912 | |||||||||
Interest expense | 153 | 131 | |||||||||
Interest (income) | (101) | (14) | |||||||||
Net foreign exchange (gain) loss | 6 | (3) | |||||||||
Other (income) expense, net | (111) | (78) | |||||||||
Earnings before taxes | 1,562 | 2,876 | |||||||||
Taxes on earnings | 244 | 429 | |||||||||
Net Earnings | $ | 1,318 | $ | 2,447 | |||||||
Basic Earnings Per Common Share | $ | 0.75 | $ | 1.38 | |||||||
Diluted Earnings Per Common Share | $ | 0.75 | $ | 1.37 | |||||||
Average Number of Common Shares Outstanding Used for Basic Earnings Per Common Share | 1,741,738 | 1,761,911 | |||||||||
Dilutive Common Stock Options | 9,977 | 12,631 | |||||||||
Average Number of Common Shares Outstanding Plus Dilutive Common Stock Options | 1,751,715 | 1,774,542 | |||||||||
Outstanding Common Stock Options Having No Dilutive Effect | 7,332 | 2,655 |
(Unaudited)
mill
| | | | | | |
| | Three Months Ended | ||||
| | March 31 | ||||
|
| 2022 |
| 2021 | ||
Net Earnings | | $ | 2,447 | | $ | 1,793 |
| | | | | | |
Foreign currency translation gain (loss) adjustments | |
| (106) | |
| (536) |
Net actuarial gains (losses) and amortization of net actuarial (losses) and prior service (costs) and credits, net of taxes of $13 in 2022 and $18 in 2021 | |
| 62 | |
| 85 |
Net gains (losses) for derivative instruments designated as cash flow hedges, net of taxes of $(15) in 2022 and $46 in 2021 | |
| (56) | |
| 112 |
Other comprehensive income (loss) | | | (100) | | | (339) |
Comprehensive Income (Loss) | | $ | 2,347 | | $ | 1,454 |
| | | | | | |
| | March 31, | | December 31, | ||
| | 2022 | | 2021 | ||
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | | | | | | |
Cumulative foreign currency translation (loss) adjustments | | $ | (5,945) | | $ | (5,839) |
Net actuarial (losses) and prior service (costs) and credits | |
| (2,608) | |
| (2,670) |
Cumulative gains (losses) on derivative instruments designated as cash flow hedges | |
| 79 | |
| 135 |
Accumulated Other Comprehensive Income (Loss) | | $ | (8,474) | | $ | (8,374) |
Three Months Ended | |||||||||||
March 31 | |||||||||||
2023 | 2022 | ||||||||||
Net Earnings | $ | 1,318 | $ | 2,447 | |||||||
Foreign currency translation gain (loss) adjustments | 139 | (106) | |||||||||
Net actuarial gains (losses) and amortization of net actuarial losses and prior service costs and credits, net of taxes of $— in 2023 and $13 in 2022 | 2 | 62 | |||||||||
Net gains (losses) for derivative instruments designated as cash flow hedges and other, net of taxes of $(58) in 2023 and $(15) in 2022 | (129) | (56) | |||||||||
Other comprehensive income (loss) | 12 | (100) | |||||||||
Comprehensive Income | $ | 1,330 | $ | 2,347 |
March 31, 2023 | December 31, 2022 | ||||||||||
Supplemental Accumulated Other Comprehensive Income (Loss) Information, net of tax: | |||||||||||
Cumulative foreign currency translation (loss) adjustments | $ | (6,594) | $ | (6,733) | |||||||
Net actuarial (losses) and prior service (costs) and credits | (1,491) | (1,493) | |||||||||
Cumulative gains (losses) on derivative instruments designated as cash flow hedges | 46 | 175 | |||||||||
Accumulated Other Comprehensive Income (Loss) | $ | (8,039) | $ | (8,051) |
| | | | | | |
| | March 31, | | December 31, | ||
|
| 2022 |
| 2021 | ||
Assets | | | | | | |
Current Assets: | | | | | | |
Cash and cash equivalents | | $ | 7,675 | | $ | 9,799 |
Short-term investments | | | 483 | | | 450 |
Trade receivables, less allowances of $640 in 2022 and $519 in 2021 | |
| 7,179 | |
| 6,487 |
Inventories: | | | | | | |
Finished products | |
| 3,470 | |
| 3,081 |
Work in process | |
| 695 | |
| 694 |
Materials | |
| 1,526 | |
| 1,382 |
Total inventories | |
| 5,691 | |
| 5,157 |
Prepaid expenses and other receivables | |
| 2,401 | |
| 2,346 |
Total Current Assets | |
| 23,429 | |
| 24,239 |
Investments | |
| 763 | |
| 816 |
Property and equipment, at cost | | | 19,521 | | | 19,364 |
Less: accumulated depreciation and amortization | |
| 10,613 | |
| 10,405 |
Net property and equipment | |
| 8,908 | |
| 8,959 |
Intangible assets, net of amortization | |
| 12,225 | |
| 12,739 |
Goodwill | |
| 23,179 | |
| 23,231 |
Deferred income taxes and other assets | |
| 5,503 | |
| 5,212 |
| | $ | 74,007 | | $ | 75,196 |
| | | | | | |
| | | | | | |
Liabilities and Shareholders’ Investment | | | | | | |
Current Liabilities: |
| | |
| | |
Trade accounts payable | | $ | 4,757 | | $ | 4,408 |
Salaries, wages and commissions | |
| 1,147 | |
| 1,625 |
Other accrued liabilities | |
| 5,577 | |
| 5,181 |
Dividends payable | |
| 824 | |
| 831 |
Income taxes payable | |
| 338 | |
| 306 |
Current portion of long-term debt | |
| 4 | |
| 754 |
Total Current Liabilities | |
| 12,647 | |
| 13,105 |
Long-term debt | |
| 17,086 | |
| 17,296 |
Post-employment obligations, deferred income taxes and other long-term liabilities | |
| 8,645 | |
| 8,771 |
Commitments and Contingencies | | | | | | |
Shareholders’ Investment: | | | | | | |
Preferred shares, 1 dollar par value Authorized — 1,000,000 shares, NaN issued | |
| — | |
| — |
Common shares, without par value Authorized — 2,400,000,000 shares | |
| 24,304 | |
| 24,470 |
Common shares held in treasury, at cost — Shares: 2022: 234,582,764; 2021: 221,191,228 | |
| (13,726) | |
| (11,822) |
Earnings employed in the business | |
| 33,295 | |
| 31,528 |
Accumulated other comprehensive income (loss) | |
| (8,474) | |
| (8,374) |
Total Abbott Shareholders’ Investment | |
| 35,399 | |
| 35,802 |
Noncontrolling Interests in Subsidiaries | |
| 230 | |
| 222 |
Total Shareholders’ Investment | |
| 35,629 | |
| 36,024 |
| | $ | 74,007 | | $ | 75,196 |
March 31, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 9,161 | $ | 9,882 | |||||||
Short-term investments | 371 | 288 | |||||||||
Trade receivables, less allowances of $503 in 2023 and $500 in 2022 | 6,020 | 6,218 | |||||||||
Inventories: | |||||||||||
Finished products | 3,944 | 3,805 | |||||||||
Work in process | 805 | 680 | |||||||||
Materials | 1,924 | 1,688 | |||||||||
Total inventories | 6,673 | 6,173 | |||||||||
Prepaid expenses and other receivables | 2,152 | 2,663 | |||||||||
Total Current Assets | 24,377 | 25,224 | |||||||||
Investments | 776 | 766 | |||||||||
Property and equipment, at cost | 20,605 | 20,212 | |||||||||
Less: accumulated depreciation and amortization | 11,323 | 11,050 | |||||||||
Net property and equipment | 9,282 | 9,162 | |||||||||
Intangible assets, net of amortization | 10,006 | 10,454 | |||||||||
Goodwill | 22,927 | 22,799 | |||||||||
Deferred income taxes and other assets | 6,426 | 6,033 | |||||||||
$ | 73,794 | $ | 74,438 | ||||||||
Liabilities and Shareholders’ Investment | |||||||||||
Current Liabilities: | |||||||||||
Trade accounts payable | $ | 4,167 | $ | 4,607 | |||||||
Salaries, wages and commissions | 1,098 | 1,556 | |||||||||
Other accrued liabilities | 5,758 | 5,845 | |||||||||
Dividends payable | 888 | 887 | |||||||||
Income taxes payable | 334 | 343 | |||||||||
Current portion of long-term debt | 2,285 | 2,251 | |||||||||
Total Current Liabilities | 14,530 | 15,489 | |||||||||
Long-term debt | 14,615 | 14,522 | |||||||||
Post-employment obligations, deferred income taxes and other long-term liabilities | 7,417 | 7,522 | |||||||||
Commitments and Contingencies | |||||||||||
Shareholders’ Investment: | |||||||||||
Preferred shares, one dollar par value Authorized — 1,000,000 shares, none issued | — | — | |||||||||
Common shares, without par value Authorized — 2,400,000,000 shares Issued at stated capital amount — Shares: 2023: 1,986,904,170; 2022: 1,986,519,278 | 24,488 | 24,709 | |||||||||
Common shares held in treasury, at cost — Shares: 2023: 247,957,371; 2022: 248,724,257 | (15,307) | (15,229) | |||||||||
Earnings employed in the business | 35,868 | 35,257 | |||||||||
Accumulated other comprehensive income (loss) | (8,039) | (8,051) | |||||||||
Total Abbott Shareholders’ Investment | 37,010 | 36,686 | |||||||||
Noncontrolling Interests in Subsidiaries | 222 | 219 | |||||||||
Total Shareholders’ Investment | 37,232 | 36,905 | |||||||||
$ | 73,794 | $ | 74,438 |
| | | | | | |
| | Three Months Ended March 31 | ||||
|
| 2022 |
| 2021 | ||
Common Shares: | | | | | | |
Balance at January 1 | | | | | | |
Shares: 2022: 1,985,273,421; 2021: 1,981,156,896 | | $ | 24,470 | | $ | 24,145 |
Issued under incentive stock programs | | |
| | |
|
Shares: 2022: 251,632; 2021: 1,048,595 | |
| 14 | |
| 47 |
Share-based compensation | |
| 324 | |
| 304 |
Issuance of restricted stock awards | |
| (504) | |
| (473) |
Balance at March 31 | | |
| | |
|
Shares: 2022: 1,985,525,053; 2021: 1,982,205,491 | | $ | 24,304 | | $ | 24,023 |
| | | | | | |
Common Shares Held in Treasury: | | | | | | |
Balance at January 1 | | | | | | |
Shares: 2022: 221,191,228; 2021: 209,926,622 | | $ | (11,822) | | $ | (10,042) |
Issued under incentive stock programs | | |
| | |
|
Shares: 2022: 4,144,476; 2021: 4,818,787 | | | 223 | |
| 231 |
Purchased | |
| | | |
|
Shares: 2022: 17,536,012; 2021: 277,508 | |
| (2,127) | |
| (34) |
Balance at March 31 | | |
| | |
|
Shares: 2022: 234,582,764; 2021: 205,385,343 | | $ | (13,726) | | $ | (9,845) |
| | | | | | |
Earnings Employed in the Business: | | | | | | |
Balance at January 1 | | $ | 31,528 | | $ | 27,627 |
Net earnings | |
| 2,447 | |
| 1,793 |
Cash dividends declared on common shares (per share — 2022: $0.47; 2021: $0.45) | |
| (826) | |
| (803) |
Effect of common and treasury share transactions | |
| 146 | |
| 52 |
Balance at March 31 | | $ | 33,295 | | $ | 28,669 |
| | | | | | |
Accumulated Other Comprehensive Income (Loss): | | | | | | |
Balance at January 1 | | $ | (8,374) | | $ | (8,946) |
Other comprehensive income (loss) | |
| (100) | |
| (339) |
Balance at March 31 | | $ | (8,474) | | $ | (9,285) |
| | | | | | |
Noncontrolling Interests in Subsidiaries: | | | | | | |
Balance at January 1 | | $ | 222 | | $ | 219 |
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | |
| 8 | |
| 7 |
Balance at March 31 | | $ | 230 | | $ | 226 |
Three Months Ended March 31 | |||||||||||
2023 | 2022 | ||||||||||
Common Shares: | |||||||||||
Balance at January 1 | |||||||||||
Shares: 2023: 1,986,519,278; 2022: 1,985,273,421 | $ | 24,709 | $ | 24,470 | |||||||
Issued under incentive stock programs | |||||||||||
Shares: 2023: 384,892; 2022: 251,632 | 16 | 14 | |||||||||
Share-based compensation | 296 | 324 | |||||||||
Issuance of restricted stock awards | (533) | (504) | |||||||||
Balance at March 31 | |||||||||||
Shares: 2023: 1,986,904,170; 2022: 1,985,525,053 | $ | 24,488 | $ | 24,304 | |||||||
Common Shares Held in Treasury: | |||||||||||
Balance at January 1 | |||||||||||
Shares: 2023: 248,724,257; 2022: 221,191,228 | $ | (15,229) | $ | (11,822) | |||||||
Issued under incentive stock programs | |||||||||||
Shares: 2023: 3,933,165; 2022: 4,144,476 | 242 | 223 | |||||||||
Purchased | |||||||||||
Shares: 2023: 3,166,279; 2022: 17,536,012 | (320) | (2,127) | |||||||||
Balance at March 31 | |||||||||||
Shares: 2023: 247,957,371; 2022: 234,582,764 | $ | (15,307) | $ | (13,726) | |||||||
Earnings Employed in the Business: | |||||||||||
Balance at January 1 | $ | 35,257 | $ | 31,528 | |||||||
Net earnings | 1,318 | 2,447 | |||||||||
Cash dividends declared on common shares (per share — 2023: $0.51; 2022: $0.47) | (890) | (826) | |||||||||
Effect of common and treasury share transactions | 183 | 146 | |||||||||
Balance at March 31 | $ | 35,868 | $ | 33,295 | |||||||
Accumulated Other Comprehensive Income (Loss): | |||||||||||
Balance at January 1 | $ | (8,051) | $ | (8,374) | |||||||
Other comprehensive income (loss) | 12 | (100) | |||||||||
Balance at March 31 | $ | (8,039) | $ | (8,474) | |||||||
Noncontrolling Interests in Subsidiaries: | |||||||||||
Balance at January 1 | $ | 219 | $ | 222 | |||||||
Noncontrolling Interests’ share of income, business combinations, net of distributions and share repurchases | 3 | 8 | |||||||||
Balance at March 31 | $ | 222 | $ | 230 |
(Unaudited)
| | | | | | |
| | Three Months Ended March 31 | ||||
|
| 2022 |
| 2021 | ||
Cash Flow From (Used in) Operating Activities: | | | | | | |
Net earnings | | $ | 2,447 | | $ | 1,793 |
Adjustments to reconcile net earnings to net cash from operating activities — | | | | | | |
Depreciation | |
| 311 | |
| 425 |
Amortization of intangible assets | |
| 512 | |
| 509 |
Share-based compensation | |
| 305 | |
| 288 |
Trade receivables | |
| (751) | |
| 165 |
Inventories | |
| (554) | |
| (537) |
Other, net | | | (205) | | | (6) |
Net Cash From Operating Activities | | | 2,065 | | | 2,637 |
| | | | | | |
Cash Flow From (Used in) Investing Activities: | | | | | | |
Acquisitions of property and equipment | |
| (321) | |
| (397) |
Acquisitions of businesses and technologies, net of cash acquired | |
| — | |
| (15) |
Sales (purchases) of other investment securities, net | | | (41) | | | (14) |
Other | |
| 2 | |
| 4 |
Net Cash (Used in) Investing Activities | |
| (360) | |
| (422) |
| | | | | | |
Cash Flow From (Used in) Financing Activities: | | | | | | |
Net borrowings (repayments) of short-term debt and other | | | 8 | | | 24 |
Repayments of long-term debt | |
| (751) | |
| (2) |
Purchases of common shares | |
| (2,307) | |
| (275) |
Proceeds from stock options exercised | |
| 59 | |
| 86 |
Dividends paid | |
| (832) | |
| (800) |
Net Cash (Used in) Financing Activities | |
| (3,823) | |
| (967) |
| | | | | | |
Effect of exchange rate changes on cash and cash equivalents | |
| (6) | |
| (32) |
| | | | | | |
Net Increase (Decrease) in Cash and Cash Equivalents | |
| (2,124) | |
| 1,216 |
Cash and Cash Equivalents, Beginning of Year | |
| 9,799 | |
| 6,838 |
Cash and Cash Equivalents, End of Period | | $ | 7,675 | | $ | 8,054 |
Three Months Ended March 31 | |||||||||||
2023 | 2022 | ||||||||||
Cash Flow From (Used in) Operating Activities: | |||||||||||
Net earnings | $ | 1,318 | $ | 2,447 | |||||||
Adjustments to reconcile net earnings to net cash from operating activities — | |||||||||||
Depreciation | 315 | 311 | |||||||||
Amortization of intangible assets | 491 | 512 | |||||||||
Share-based compensation | 281 | 305 | |||||||||
Trade receivables | 233 | (751) | |||||||||
Inventories | (419) | (554) | |||||||||
Other, net | (1,076) | (205) | |||||||||
Net Cash From Operating Activities | 1,143 | 2,065 | |||||||||
Cash Flow From (Used in) Investing Activities: | |||||||||||
Acquisitions of property and equipment | (380) | (321) | |||||||||
Sales (purchases) of other investment securities, net | (86) | (41) | |||||||||
Other | 4 | 2 | |||||||||
Net Cash From (Used in) Investing Activities | (462) | (360) | |||||||||
Cash Flow From (Used in) Financing Activities: | |||||||||||
Net borrowings (repayments) of short-term debt and other | (42) | 8 | |||||||||
Repayments of long-term debt | — | (751) | |||||||||
Purchases of common shares | (540) | (2,307) | |||||||||
Proceeds from stock options exercised | 62 | 59 | |||||||||
Dividends paid | (890) | (832) | |||||||||
Net Cash From (Used in) Financing Activities | (1,410) | (3,823) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 8 | (6) | |||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | (721) | (2,124) | |||||||||
Cash and Cash Equivalents, Beginning of Year | 9,882 | 9,799 | |||||||||
Cash and Cash Equivalents, End of Period | $ | 9,161 | $ | 7,675 |
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2022 | | Three Months Ended March 31, 2021 | ||||||||||||||
(in millions) |
| U.S. |
| Int’l |
| Total |
| U.S. |
| Int’l |
| Total | ||||||
Established Pharmaceutical Products — | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Key Emerging Markets | | $ | — | | $ | 902 | | $ | 902 | | $ | — | | $ | 821 | | $ | 821 |
Other | |
| — | |
| 245 | |
| 245 | |
| — | |
| 249 | | | 249 |
Total | |
| — | |
| 1,147 | |
| 1,147 | |
| — | |
| 1,070 | | | 1,070 |
Nutritionals — | |
| | |
| | |
| | |
| | |
| | |
| |
Pediatric Nutritionals | |
| 338 | |
| 509 | |
| 847 | |
| 508 | |
| 558 | |
| 1,066 |
Adult Nutritionals | |
| 339 | |
| 708 | |
| 1,047 | |
| 328 | |
| 642 | |
| 970 |
Total | |
| 677 | |
| 1,217 | |
| 1,894 | |
| 836 | |
| 1,200 | |
| 2,036 |
Diagnostics — | |
| | |
| | |
| | |
| | |
| | |
| |
Core Laboratory | |
| 268 | |
| 916 | |
| 1,184 | |
| 271 | |
| 911 | |
| 1,182 |
Molecular | |
| 172 | |
| 248 | |
| 420 | |
| 175 | |
| 272 | |
| 447 |
Point of Care | |
| 91 | |
| 37 | |
| 128 | |
| 92 | |
| 37 | |
| 129 |
Rapid Diagnostics | |
| 2,210 | |
| 1,344 | |
| 3,554 | |
| 1,103 | |
| 1,153 | |
| 2,256 |
Total | |
| 2,741 | |
| 2,545 | |
| 5,286 | |
| 1,641 | |
| 2,373 | |
| 4,014 |
Medical Devices — | |
| | |
| | |
| | |
| | |
| | |
| |
Rhythm Management | |
| 248 | |
| 276 | |
| 524 | |
| 241 | |
| 278 | |
| 519 |
Electrophysiology | |
| 216 | |
| 269 | |
| 485 | |
| 179 | |
| 252 | |
| 431 |
Heart Failure | |
| 167 | |
| 54 | |
| 221 | |
| 145 | |
| 49 | |
| 194 |
Vascular | |
| 209 | |
| 410 | |
| 619 | |
| 219 | |
| 416 | |
| 635 |
Structural Heart | |
| 190 | |
| 221 | |
| 411 | |
| 169 | |
| 208 | |
| 377 |
Neuromodulation | |
| 143 | |
| 36 | |
| 179 | |
| 145 | |
| 39 | |
| 184 |
Diabetes Care | | | 343 | | | 783 | | | 1,126 | | | 253 | | | 727 | | | 980 |
Total | |
| 1,516 | |
| 2,049 | |
| 3,565 | |
| 1,351 | |
| 1,969 | |
| 3,320 |
| | | | | | | | | | | | | | | | | | |
Other | |
| 3 | |
| — | |
| 3 | |
| 10 | |
| 6 | |
| 16 |
| | | | | | | | | | | | | | | | | | |
Total | | $ | 4,937 | | $ | 6,958 | | $ | 11,895 | | $ | 3,838 | | $ | 6,618 | | $ | 10,456 |
8
Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||
(in millions) | U.S. | Int’l | Total | U.S. | Int’l | Total | ||||||||||||||||||||||||||||||||
Established Pharmaceutical Products — | ||||||||||||||||||||||||||||||||||||||
Key Emerging Markets | $ | — | $ | 912 | $ | 912 | $ | — | $ | 906 | $ | 906 | ||||||||||||||||||||||||||
Other | — | 277 | 277 | — | 241 | 241 | ||||||||||||||||||||||||||||||||
Total | — | 1,189 | 1,189 | — | 1,147 | 1,147 | ||||||||||||||||||||||||||||||||
Nutritionals — | ||||||||||||||||||||||||||||||||||||||
Pediatric Nutritionals | 459 | 465 | 924 | 338 | 509 | 847 | ||||||||||||||||||||||||||||||||
Adult Nutritionals | 353 | 690 | 1,043 | 339 | 708 | 1,047 | ||||||||||||||||||||||||||||||||
Total | 812 | 1,155 | 1,967 | 677 | 1,217 | 1,894 | ||||||||||||||||||||||||||||||||
Diagnostics — | ||||||||||||||||||||||||||||||||||||||
Core Laboratory | 289 | 893 | 1,182 | 268 | 916 | 1,184 | ||||||||||||||||||||||||||||||||
Molecular | 47 | 100 | 147 | 172 | 248 | 420 | ||||||||||||||||||||||||||||||||
Point of Care | 93 | 41 | 134 | 91 | 37 | 128 | ||||||||||||||||||||||||||||||||
Rapid Diagnostics | 906 | 319 | 1,225 | 2,181 | 1,344 | 3,525 | ||||||||||||||||||||||||||||||||
Total | 1,335 | 1,353 | 2,688 | 2,712 | 2,545 | 5,257 | ||||||||||||||||||||||||||||||||
Medical Devices — | ||||||||||||||||||||||||||||||||||||||
Rhythm Management | 260 | 267 | 527 | 248 | 276 | 524 | ||||||||||||||||||||||||||||||||
Electrophysiology | 238 | 267 | 505 | 216 | 269 | 485 | ||||||||||||||||||||||||||||||||
Heart Failure | 218 | 63 | 281 | 196 | 54 | 250 | ||||||||||||||||||||||||||||||||
Vascular | 218 | 399 | 617 | 209 | 410 | 619 | ||||||||||||||||||||||||||||||||
Structural Heart | 210 | 251 | 461 | 190 | 221 | 411 | ||||||||||||||||||||||||||||||||
Neuromodulation | 155 | 41 | 196 | 143 | 36 | 179 | ||||||||||||||||||||||||||||||||
Diabetes Care | 479 | 834 | 1,313 | 343 | 783 | 1,126 | ||||||||||||||||||||||||||||||||
Total | 1,778 | 2,122 | 3,900 | 1,545 | 2,049 | 3,594 | ||||||||||||||||||||||||||||||||
Other | 3 | — | 3 | 3 | — | 3 | ||||||||||||||||||||||||||||||||
Total | $ | 3,928 | $ | 5,819 | $ | 9,747 | $ | 4,937 | $ | 6,958 | $ | 11,895 |
| | | |
(in millions) |
| | |
Contract Liabilities: | | | |
Balance at December 31, 2021 | | $ | 520 |
Unearned revenue from cash received during the period | | | 171 |
Revenue recognized related to contract liability balance | | | (178) |
Balance at March 31, 2022 | | $ | 513 |
(in millions) | ||||||||
Contract Liabilities: | ||||||||
Balance at December 31, 2022 | $ | 500 | ||||||
Unearned revenue from cash received during the period | 122 | |||||||
Revenue recognized related to contract liability balance | (93) | |||||||
Balance at March 31, 2023 | $ | 529 |
9
Note 3 — Supplemental Financial Information (Continued)
The following summarizes the activity for the first three months of 20222023 related to the allowance for doubtful accounts as of March 31, 2022:
2023:
| | | |
(in millions) |
| | |
Allowance for Doubtful Accounts: | | | |
Balance at December 31, 2021 | | $ | 313 |
Provisions/charges to income | | | 3 |
Amounts charged off and other deductions | |
| (15) |
Balance at March 31, 2022 | | $ | 301 |
(in millions) | ||||||||
Allowance for Doubtful Accounts: | ||||||||
Balance at December 31, 2022 | $ | 262 | ||||||
Provisions/charges to income | 8 | |||||||
Amounts charged off and other adjustments | 2 | |||||||
Balance at March 31, 2023 | $ | 272 |
| | | | | | |
| | March 31, | | December 31, | ||
(in millions) |
| 2022 |
| 2021 | ||
Long-term Investments: | | | | | | |
Equity securities | | $ | 703 | | $ | 748 |
Other | |
| 60 | |
| 68 |
Total | | $ | 763 | | $ | 816 |
(in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Long-term Investments: | ||||||||||||||
Equity securities | $ | 565 | $ | 558 | ||||||||||
Other | 211 | 208 | ||||||||||||
Total | $ | 776 | $ | 766 |
trust and additional investments,
partially offset by equity method investment losses.
10
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31 | ||||||||||||||||
| | | | | | | | | | Cumulative Gains (Losses) | ||||||||
| | Cumulative Foreign | | Net Actuarial (Losses) and | | on Derivative Instruments | ||||||||||||
| | Currency Translation | | Prior Service (Costs) and | | Designated as Cash Flow | ||||||||||||
| | Adjustments | | Credits | | Hedges | ||||||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||
Balance at January 1 | | $ | (5,839) | | $ | (4,859) | | $ | (2,670) | | $ | (3,871) | | $ | 135 | | $ | (216) |
Other comprehensive income (loss) before reclassifications | |
| (106) | |
| (536) | | | 17 | |
| 22 | |
| (34) | |
| 96 |
Amounts reclassified from accumulated other comprehensive income | |
| — | |
| — | |
| 45 | |
| 63 | |
| (22) | |
| 16 |
Net current period comprehensive income (loss) | |
| (106) | |
| (536) | |
| 62 | |
| 85 | |
| (56) | |
| 112 |
Balance at March 31 | | $ | (5,945) | | $ | (5,395) | | $ | (2,608) | | $ | (3,786) | | $ | 79 | | $ | (104) |
Three Months Ended March 31 | ||||||||||||||||||||||||||||||||||||||
Cumulative Foreign Currency Translation (Loss) Adjustments | Net Actuarial (Losses) and Prior Service (Costs) and Credits | Cumulative Gains (Losses) on Derivative Instruments Designated as Cash Flow Hedges and Other | ||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
Balance at January 1 | $ | (6,733) | $ | (5,839) | $ | (1,493) | $ | (2,670) | $ | 175 | $ | 135 | ||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 139 | (106) | 2 | 17 | (42) | (34) | ||||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | 45 | (87) | (22) | ||||||||||||||||||||||||||||||||
Net current period comprehensive income (loss) | 139 | (106) | 2 | 62 | (129) | (56) | ||||||||||||||||||||||||||||||||
Balance at March 31 | $ | (6,594) | $ | (5,945) | $ | (1,491) | $ | (2,608) | $ | 46 | $ | 79 |
(Income) loss
2023.
2026 and $1.2 billion in 2027.
11
On May 27, 2021,
In the second half of 2021, as the Delta and Omicron variants of COVID-19 spread and the number of new COVID-19 cases increased significantly, particularly in the U.S., demand for rapid COVID-19 tests increased significantly. As a result, in thesecond half of 2021, Abbott sold approximately $181 million of inventory that was previously estimated to have no net realizable value under the second quarter of 2021 restructuring action. In addition, the estimate of other exit costs was reduced by a net $58 million as Abbott fulfilled its purchase obligations under certain contracts for which a liability was recorded in the second quarter or Abbott settled with the counterparty in the second half of 2021.
The following summarizes the activity related to this restructuring action and the status of the related accruals as of March 31, 2022:
| | | | | | | | | | | | |
| | Inventory- | | | | | | | | | | |
| | Related | | Fixed Asset | | Other Exit | | | | |||
(in millions) |
| Charges |
| Write-Downs |
| Costs |
| Total | ||||
Restructuring charges recorded in 2021 | | $ | 248 | | $ | 80 | | $ | 113 | | $ | 441 |
Payments | |
| — | |
| — | |
| (90) | |
| (90) |
Other non-cash | |
| (248) | |
| (80) | |
| — | |
| (328) |
Accrued balance at December 31, 2021 | | | — | | | — | | | 23 | | | 23 |
Payments and other adjustments | | | — | | | — | | | (3) | | | (3) |
Accrued balance at March 31, 2022 | | $ | — | | $ | — | | $ | 20 | | $ | 20 |
In 2021, Abbott management approvedvarious plans to streamline operations in order to reduce costs and improve efficiencies inAbbott’s diagnostics, established pharmaceuticals, nutritional, and its medical devices, nutritional, diagnostic, and established pharmaceutical businesses. In the first three months of 2023, Abbott recorded employee-relatedemployee related severance and other charges ofapproximately $68$17 million, in 2021 of whichapproximately $16$6 million was recorded in Cost of products sold, approximately $4 million was recorded in Research and development, and approximately $48$11 million was recorded in Selling, general and administrative expense.
expenses.
| | | |
(in millions) |
| | |
Restructuring charges | | $ | 68 |
Payments and other adjustments | | | (7) |
Accrued balance at December 31, 2021 | | | 61 |
Payments and other adjustments | | | (16) |
Accrued balance at March 31, 2022 | | $ | 45 |
(in millions) | ||||||||
Accrued balance at December 31, 2022 | $ | 228 | ||||||
Restructuring charges in 2023 | 17 | |||||||
Payments and other adjustments | (61) | |||||||
Accrued balance at March 31, 2023 | $ | 184 |
| | | | | | |
|
| Outstanding |
| Exercisable | ||
Number of shares |
|
| 29,479,237 | |
| 23,547,781 |
Weighted average remaining life (years) |
|
| 5.9 | |
| 5.1 |
Weighted average exercise price |
| $ | 69.87 | | $ | 59.23 |
Aggregate intrinsic value (in millions) |
| $ | 1,445 | | $ | 1,397 |
Outstanding | Exercisable | |||||||||||||
Number of shares | 29,760,644 | 25,107,006 | ||||||||||||
Weighted average remaining life (years) | 5.4 | 4.7 | ||||||||||||
Weighted average exercise price | $ | 73.33 | $ | 65.76 | ||||||||||
Aggregate intrinsic value (in millions) | $ | 947 | $ | 946 |
13
2022:
| | | | | | | | | | | | | | | | |
| | Fair Value - Assets | | Fair��Value - Liabilities | ||||||||||||
| | March 31, | | Dec. 31, | | | | March 31, | | Dec. 31, |
| | ||||
(in millions) |
| 2022 |
| 2021 |
| Balance Sheet Caption |
| 2022 |
| 2021 |
| Balance Sheet Caption | ||||
Interest rate swaps designated as fair value hedges | | $ | — |
| $ | 87 |
| Deferred income taxes and other assets |
| $ | 34 |
| $ | — |
| Post-employment obligations, deferred income taxes and other long-term liabilities |
Foreign currency forward exchange contracts: | | | | | | | | | | | | | | | | |
Hedging instruments | |
| 204 | |
| 222 |
| Prepaid expenses and other receivables | |
| 183 | |
| 65 |
| Other accrued liabilities |
Others not designated as hedges | |
| 149 | |
| 70 |
| Prepaid expenses and other receivables | |
| 93 | |
| 32 |
| Other accrued liabilities |
Debt designated as a hedge of net investment in a foreign subsidiary | | | — | | | — | | n/a | | | 491 | | | 521 | | Long-term debt |
| | $ | 353 |
| $ | 379 | | |
| $ | 801 |
| $ | 618 | | |
Fair Value - Assets | Fair Value - Liabilities | |||||||||||||||||||||||||||||||||||||
(in millions) | March 31, 2023 | December 31, 2022 | Balance Sheet Caption | March 31, 2023 | December 31, 2022 | Balance Sheet Caption | ||||||||||||||||||||||||||||||||
Interest rate swaps designated as fair value hedges: | ||||||||||||||||||||||||||||||||||||||
Non-current | $ | — | $ | — | Deferred income taxes and other assets | $ | 126 | $ | 136 | Post-employment obligations, deferred income taxes and other long-term liabilities | ||||||||||||||||||||||||||||
Current | — | — | Prepaid expenses and other receivables | 21 | 20 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Foreign currency forward exchange contracts: | ||||||||||||||||||||||||||||||||||||||
Hedging instruments | 76 | 304 | Prepaid expenses and other receivables | 139 | 96 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Others not designated as hedges | 78 | 108 | Prepaid expenses and other receivables | 96 | 130 | Other accrued liabilities | ||||||||||||||||||||||||||||||||
Debt designated as a hedge of net investment in a foreign subsidiary | — | — | n/a | 451 | 446 | Long-term debt | ||||||||||||||||||||||||||||||||
$ | 154 | $ | 412 | $ | 833 | $ | 828 |
2022.
| | | | | | | | | | | | | | |
| | Gain (loss) Recognized in | | Income (expense) and | | | ||||||||
| | Other Comprehensive | | Gain (loss) Reclassified | | | ||||||||
| | Income (loss) | | into Income | | | ||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| Income Statement Caption | ||||
Foreign currency forward exchange contracts designated as cash flow hedges | | $ | (49) | | $ | 134 | | $ | 27 | | $ | (23) | | Cost of products sold |
Debt designated as a hedge of net investment in a foreign subsidiary | |
| 30 | |
| 35 | |
| — | |
| — |
| n/a |
Interest rate swaps designated as fair value hedges | |
| n/a | |
| n/a | |
| (121) | |
| (69) |
| Interest expense |
Gain (loss) Recognized in Other Comprehensive Income (loss) | Income (expense) and Gain (loss) Reclassified into Income | |||||||||||||||||||||||||||||||||||||
Three Months Ended March 31 | Three Months Ended March 31 | |||||||||||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | Income Statement Caption | |||||||||||||||||||||||||||||||||
Foreign currency forward exchange contracts designated as cash flow hedges | $ | (63) | $ | (49) | $ | 126 | $ | 27 | Cost of products sold | |||||||||||||||||||||||||||||
Debt designated as a hedge of net investment in a foreign subsidiary | (5) | 30 | — | — | n/a | |||||||||||||||||||||||||||||||||
Interest rate swaps designated as fair value hedges | n/a | n/a | 9 | (121) | Interest expense |
14
Note 9 — Financial Instruments, Derivatives and Fair Value Measures (Continued)
The carrying values and fair values of certain financial instruments as of March 31, 20222023 and December 31, 20212022 are shown in the following table. The carrying values of all other financial instruments approximate their estimated fair values. The counterparties to financial instruments consist of select major international financial institutions. Abbott does not expect any losses from non-performance by these counterparties.
| | | | | | | | | | | | |
| | March 31, 2022 | | December 31, 2021 | ||||||||
|
| Carrying |
| Fair |
| Carrying |
| Fair | ||||
(in millions) | | Value | | Value | | Value | | Value | ||||
Long-term Investment Securities: | | | |
| | | | | |
| | |
Equity securities | | $ | 703 | | $ | 703 | | $ | 748 | | $ | 748 |
Other | |
| 60 | |
| 60 | |
| 68 | |
| 68 |
Total long-term debt | | | (17,090) | | | (18,704) | | | (18,050) | | | (21,152) |
Foreign Currency Forward Exchange Contracts: | |
| | |
| | |
| | | | |
Receivable position | |
| 353 | |
| 353 | |
| 292 | |
| 292 |
(Payable) position | | | (276) | | | (276) | | | (97) | | | (97) |
Interest Rate Hedge Contracts: | |
| | |
| | |
| | |
| |
Receivable position | | | — | | | — | | | 87 | | | 87 |
(Payable) position | | | (34) | | | (34) | | | — | | | — |
March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||||
Long-term Investment Securities: | ||||||||||||||||||||||||||
Equity securities | $ | 565 | $ | 565 | $ | 558 | $ | 558 | ||||||||||||||||||
Other | 211 | 211 | 208 | 208 | ||||||||||||||||||||||
Total Long-term Debt | (16,900) | (16,927) | (16,773) | (16,313) | ||||||||||||||||||||||
Foreign Currency Forward Exchange Contracts: | ||||||||||||||||||||||||||
Receivable position | 154 | 154 | 412 | 412 | ||||||||||||||||||||||
(Payable) position | (235) | (235) | (226) | (226) | ||||||||||||||||||||||
Interest Rate Hedge Contracts: | ||||||||||||||||||||||||||
(Payable) position | (147) | (147) | (156) | (156) |
| | | | | | | | | | | | |
| | | | | Basis of Fair Value Measurement | |||||||
| | | | | Quoted | | Significant | | | | ||
| | | | | Prices in | | Other | | Significant | |||
| | Outstanding | | Active | | Observable | | Unobservable | ||||
(in millions) |
| Balances |
| Markets |
| Inputs |
| Inputs | ||||
March 31, 2022: | | | | | | | | | | | | |
Equity securities | | $ | 367 | | $ | 367 |
| $ | — |
| $ | — |
Foreign currency forward exchange contracts | |
| 353 | |
| — | |
| 353 | |
| — |
Total Assets | | $ | 720 |
| $ | 367 |
| $ | 353 |
| $ | — |
| | | | | | | | | | | | |
Fair value of hedged long-term debt | | $ | 2,805 | | $ | — |
| $ | 2,805 |
| $ | — |
Interest rate swap derivative financial instruments | | | 34 | | | — | | | 34 | | | — |
Foreign currency forward exchange contracts | | | 276 | | | — | | | 276 | | | — |
Contingent consideration related to business combinations | |
| 134 | |
| — | |
| — | |
| 134 |
Total Liabilities | | $ | 3,249 |
| $ | — |
| $ | 3,115 | | $ | 134 |
| | | | | | | | | | | | |
December 31, 2021: | | | | | | | | | | | | |
Equity securities | | $ | 402 |
| $ | 402 |
| $ | — |
| $ | — |
Interest rate swap derivative financial instruments | |
| 87 | |
| — | |
| 87 | |
| — |
Foreign currency forward exchange contracts | |
| 292 | |
| — | |
| 292 | |
| — |
Total Assets | | $ | 781 |
| $ | 402 |
| $ | 379 |
| $ | — |
| | | | | | | | | | | | |
Fair value of hedged long-term debt | | $ | 2,926 |
| $ | — |
| $ | 2,926 |
| $ | — |
Foreign currency forward exchange contracts | |
| 97 | |
| — | |
| 97 | |
| — |
Contingent consideration related to business combinations | |
| 130 | |
| — | |
| — | |
| 130 |
Total Liabilities | | $ | 3,153 |
| $ | — |
| $ | 3,023 |
| $ | 130 |
15
Basis of Fair Value Measurement | ||||||||||||||||||||||||||
(in millions) | Outstanding Balances | Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||
March 31, 2023: | ||||||||||||||||||||||||||
Equity securities | $ | 315 | $ | 315 | $ | — | $ | — | ||||||||||||||||||
Foreign currency forward exchange contracts | 154 | — | 154 | — | ||||||||||||||||||||||
Total Assets | $ | 469 | $ | 315 | $ | 154 | $ | — | ||||||||||||||||||
Fair value of hedged long-term debt | $ | 2,720 | $ | — | $ | 2,720 | $ | — | ||||||||||||||||||
Interest rate swap derivative financial instruments | 147 | — | 147 | — | ||||||||||||||||||||||
Foreign currency forward exchange contracts | 235 | — | 235 | — | ||||||||||||||||||||||
Contingent consideration related to business combinations | 133 | — | — | 133 | ||||||||||||||||||||||
Total Liabilities | $ | 3,235 | $ | — | $ | 3,102 | $ | 133 | ||||||||||||||||||
December 31, 2022: | ||||||||||||||||||||||||||
Equity securities | $ | 307 | $ | 307 | $ | — | $ | — | ||||||||||||||||||
Foreign currency forward exchange contracts | 412 | — | 412 | — | ||||||||||||||||||||||
Total Assets | $ | 719 | $ | 307 | $ | 412 | $ | — | ||||||||||||||||||
Fair value of hedged long-term debt | $ | 2,691 | $ | — | $ | 2,691 | $ | — | ||||||||||||||||||
Interest rate swap derivative financial instruments | 156 | — | 156 | — | ||||||||||||||||||||||
Foreign currency forward exchange contracts | 226 | — | 226 | — | ||||||||||||||||||||||
Contingent consideration related to business combinations | 130 | — | — | 130 | ||||||||||||||||||||||
Total Liabilities | $ | 3,203 | $ | — | $ | 3,073 | $ | 130 |
Note 9 — Financial Instruments, Derivatives and Fair Value Measures (Continued)
The fair value of foreign currency forward exchange contracts is determined using a market approach, which utilizes values for comparable derivative instruments. The fair value of debt was determined based on the face value of the debt adjusted for the fair value of the interest rate swaps, which is based on a discounted cash flow analysis using significant other observable inputs. The fair value of the contingent consideration was determined based on independent appraisals at the time of acquisition, adjusted for the time value of money and other changes in fair value.
| | | | | | | | | | | | |
| | Defined Benefit Plans | | Medical and Dental Plans | ||||||||
| | March 31, | | March 31, | | March 31, | | March 31, | ||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
| | | | | | | | | | | | |
Service cost — benefits earned during the period | | $ | 96 | | $ | 100 | | $ | 13 | | $ | 14 |
Interest cost on projected benefit obligations | |
| 76 | |
| 62 | |
| 10 | |
| 8 |
Expected return on plan assets | |
| (236) | |
| (211) | |
| (7) | |
| (7) |
Net amortization of: | | | | | | | | | | | | |
Actuarial loss, net | |
| 59 | |
| 81 | |
| 5 | |
| 7 |
Prior service cost (credit) | |
| — | |
| — | |
| (6) | |
| (7) |
Net cost (credit) | | $ | (5) | | $ | 32 | | $ | 15 | | $ | 15 |
Defined Benefit Plans | Medical and Dental Plans | ||||||||||||||||||||||||||||
Three Months Ended March 31 | Three Months Ended March 31 | ||||||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Service cost - benefits earned during the period | $ | 60 | $ | 96 | $ | 9 | $ | 13 | |||||||||||||||||||||
Interest cost on projected benefit obligations | 114 | 76 | 14 | 10 | |||||||||||||||||||||||||
Expected return on plan assets | (242) | (236) | (6) | (7) | |||||||||||||||||||||||||
Net amortization of: | |||||||||||||||||||||||||||||
Actuarial loss, net | 3 | 59 | — | 5 | |||||||||||||||||||||||||
Prior service cost (credit) | — | — | (3) | (6) | |||||||||||||||||||||||||
Net cost (credit) | $ | (65) | $ | (5) | $ | 14 | $ | 15 |
16
Note 1213 — Taxes on Earnings
17
Net Sales to External Customers | Operating Earnings | |||||||||||||||||||||||||
Three Months Ended March 31 | Three Months Ended March 31 | |||||||||||||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Established Pharmaceutical Products | $ | 1,189 | $ | 1,147 | $ | 300 | $ | 242 | ||||||||||||||||||
Nutritional Products | 1,967 | 1,894 | 380 | 251 | ||||||||||||||||||||||
Diagnostic Products | 2,688 | 5,257 | 651 | 2,564 | ||||||||||||||||||||||
Medical Devices | 3,900 | 3,594 | 1,078 | 1,083 | ||||||||||||||||||||||
Total Reportable Segments | 9,744 | 11,892 | 2,409 | 4,140 | ||||||||||||||||||||||
Other | 3 | 3 | ||||||||||||||||||||||||
Net sales | $ | 9,747 | $ | 11,895 | ||||||||||||||||||||||
Corporate functions and benefit plan costs | (77) | (114) | ||||||||||||||||||||||||
Net interest expense | (52) | (117) | ||||||||||||||||||||||||
Share-based compensation (a) | (281) | (305) | ||||||||||||||||||||||||
Amortization of intangible assets | (491) | (512) | ||||||||||||||||||||||||
Other, net (b) | 54 | (216) | ||||||||||||||||||||||||
Earnings before taxes | $ | 1,562 | $ | 2,876 |
| | | | | | | | | | | | |
| | Three Months Ended March 31 | ||||||||||
| | Net Sales to | | Operating | ||||||||
| | External Customers | | Earnings | ||||||||
(in millions) |
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||
Established Pharmaceutical Products | | $ | 1,147 | | $ | 1,070 | | $ | 242 | | $ | 169 |
Nutritional Products | |
| 1,894 | |
| 2,036 | |
| 251 | |
| 467 |
Diagnostic Products | |
| 5,286 | |
| 4,014 | |
| 2,569 | |
| 1,701 |
Medical Devices | |
| 3,565 | |
| 3,320 | |
| 1,078 | |
| 1,007 |
Total Reportable Segments | |
| 11,892 | |
| 10,440 | |
| 4,140 | |
| 3,344 |
Other | |
| 3 | |
| 16 | | | | | | |
Net sales | | $ | 11,895 | | $ | 10,456 | | | | | | |
Corporate functions and benefit plans costs | | | | | | | | | (114) | | | (114) |
Net interest expense | | | | | | | | | (117) | | | (124) |
Share-based compensation (a) | | | | | | | | | (305) | | | (288) |
Amortization of intangible assets | | | | | | | | | (512) | | | (509) |
Other, net (b) | | | | | | | | | (216) | | | (266) |
Earnings before taxes | | | | | | | | $ | 2,876 | | $ | 2,043 |
Notes: | 2022 Sales and Operating Earnings for the Diagnostic Products and Medical Devices reportable segments have been updated to reflect the internal transfer of the Acelis Connected Health business from Diagnostic Products to Medical Devices on January 1, 2023. | ||||
(a) | Approximately 45 percent of the annual net cost of share-based awards will typically be recognized in the first quarter due to the timing of the granting of share-based awards. | ||||
(b) |
Other, net for the three months ended March 31, 2022 includes $120 million of charges related to a voluntary recall within the Nutritional Products segment. |
18
Net Sales to External Customers Three Months Three Months Ended Ended Impact of Total Change March 31, March 31, Total Foreign Excl. Foreign (in millions) 2022 2021 Change Exchange Exchange Established Pharmaceutical Products $ 1,147 $ 1,070 7.1 % (6.3) % 13.4 % Nutritional Products 1,894 2,036 (7.0) (2.6) (4.4) Diagnostic Products 5,286 4,014 31.7 (3.4) 35.1 Medical Devices 3,565 3,320 7.4 (4.1) 11.5 Total Reportable Segments 11,892 10,440 13.9 (3.8) 17.7 Other 3 16 (85.8) — (85.8) Net Sales $ 11,895 $ 10,456 13.8 (3.7) 17.5 Total U.S. $ 4,937 $ 3,838 28.6 — 28.6 Total International $ 6,958 $ 6,618 5.1 (6.0) 11.1 -— Results of Operationstable detailstables detail sales by reportable segment for the three months ended March 31. Percent changes are versus the prior year and are based on unrounded numbers.Net Sales to External Customers (in millions) Three Months Ended
March 31, 2023Three Months Ended
March 31, 2022Total
ChangeImpact of
Foreign
ExchangeTotal Change
Excl. Foreign
ExchangeEstablished Pharmaceutical Products $ 1,189 $ 1,147 3.7 % (7.4) % 11.1 % Nutritional Products 1,967 1,894 3.8 (3.9) 7.7 Diagnostic Products 2,688 5,257 (48.9) (1.8) (47.1) Medical Devices 3,900 3,594 8.5 (3.9) 12.4 Total Reportable Segments 9,744 11,892 (18.1) (3.3) (14.8) Other 3 3 n/m n/m n/m Net Sales $ 9,747 $ 11,895 (18.1) (3.3) (14.8) Total U.S. $ 3,928 $ 4,937 (20.4) — (20.4) Total International $ 5,819 $ 6,958 (16.4) (5.7) (10.7) Notes: The Acelis Connected Health business was internally transferred from Diagnostic Products to Medical Devices on January 1, 2023. As a result, $29 million of sales for the first quarter of 2022 were moved from Diagnostic Products to Medical Devices. In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates. n/m = Percent change is not meaningful Note: In order to compute results excluding the impact of exchange rates, current year U.S. dollar sales are multiplied or divided, as appropriate, by the current year average foreign exchange rates and then those amounts are multiplied or divided, as appropriate, by the prior year average foreign exchange rates.17.514.8 percent increasedecrease in total net sales during the first three months of 2022,2023, excluding the impact of foreign exchange, reflected the decrease in demand for Abbott’s rapid diagnosticsdiagnostic tests to detect COVID-19, as well as growth in Abbott’s Medical Devices and Established Pharmaceutical Products segments partially offset by lower Nutritional sales. During the first quarter of 2022,higher growth across other businesses. Abbott’s COVID-19 testing-related sales totaled approximately $3.3 billion led by combined sales of approximately $3.0 billion related to Abbott’s BinaxNOW®, Panbio®, and ID NOW® rapid testing platforms. During$730 million during the first quarter of 2021, Abbott’s COVID-19 testing-related sales totaled2023 and approximately $2.2$3.3 billion led by combined salesduring the first quarter of approximately $1.8 billion related to Abbott’s BinaxNOW, Panbio, and ID NOW rapid testing platforms.2022. Excluding the impact of COVID-19 testing-related sales, Abbott’s total net sales increased 3.94.9 percent. Excluding the impacts of COVID-19 testing-related sales and foreign exchange, Abbott’s total net sales increased 7.79.4 percent. Abbott’s net sales were unfavorably impacted by changes in foreign exchange rates in the first quarter as the relatively stronger U.S. dollar decreased total international sales by 6.05.7 percent and total sales by 3.73.3 percent.the duration and impact of the currentdemand for COVID-19 pandemic,tests, the future extent to which the COVID-19 pandemic will have a material effect on Abbott’s business, financial condition or results of operations is uncertain.19
The table below provides detail by sales category for the three months ended March 31. Percent changes are versus the prior year and are based on unrounded numbers.
| | | | | | | | | | | | | |
|
| | |
| | |
| |
| Impact of |
| Total Change |
|
| | March 31, | | March 31, | | Total | | Foreign | | Excl. Foreign |
| ||
(in millions) | | 2022 | | 2021 | | Change | | Exchange | | Exchange |
| ||
Established Pharmaceutical Products — |
| |
|
| |
|
|
|
|
|
|
| |
Key Emerging Markets | | $ | 902 | | $ | 821 | | 9.8 | % | (7.3) | % | 17.1 | % |
Other Emerging Markets | |
| 245 | |
| 249 | | (1.7) |
| (2.9) |
| 1.2 | |
| | | | | | | | | | | | | |
Nutritionals — | |
| | |
| | | |
| |
| | |
International Pediatric Nutritionals | |
| 509 | |
| 558 | | (8.8) |
| (3.4) |
| (5.4) | |
U.S. Pediatric Nutritionals | |
| 338 | |
| 508 | | (33.6) |
| — |
| (33.6) | |
International Adult Nutritionals | |
| 708 | |
| 642 | | 10.3 |
| (5.3) |
| 15.6 | |
U.S. Adult Nutritionals | |
| 339 | |
| 328 | | 3.7 |
| — |
| 3.7 | |
| | | | | | | | | | | | | |
Diagnostics — | |
| | |
| | | |
| |
| | |
Core Laboratory | |
| 1,184 | |
| 1,182 | | 0.1 |
| (4.1) |
| 4.2 | |
Molecular | |
| 420 | |
| 447 | | (5.9) |
| (2.9) |
| (3.0) | |
Point of Care | |
| 128 | |
| 129 | | (0.6) |
| (1.0) |
| 0.4 | |
Rapid Diagnostics | |
| 3,554 | |
| 2,256 | | 57.5 |
| (3.3) |
| 60.8 | |
| | | | | | | | | | | | | |
Medical Devices — | |
| | |
| | | |
| |
| | |
Rhythm Management | |
| 524 | |
| 519 | | 1.0 |
| (3.2) |
| 4.2 | |
Electrophysiology | |
| 485 | |
| 431 | | 12.6 |
| (4.2) |
| 16.8 | |
Heart Failure | |
| 221 | |
| 194 | | 14.2 |
| (2.0) |
| 16.2 | |
Vascular | |
| 619 | |
| 635 | | (2.6) |
| (3.6) |
| 1.0 | |
Structural Heart | |
| 411 | |
| 377 | | 9.1 |
| (4.7) |
| 13.8 | |
Neuromodulation | |
| 179 | |
| 184 | | (3.1) |
| (1.6) |
| (1.5) | |
Diabetes Care | | | 1,126 | | | 980 | | 14.9 | | (5.5) | | 20.4 | |
(in millions) | March 31, 2023 | March 31, 2022 | Total Change | Impact of Foreign Exchange | Total Change Excl. Foreign Exchange | |||||||||||||||||||||||||||
Established Pharmaceutical Products — | ||||||||||||||||||||||||||||||||
Key Emerging Markets | $ | 912 | $ | 906 | 0.7 | % | (7.6) | % | 8.3 | % | ||||||||||||||||||||||
Other Emerging Markets | 277 | 241 | 15.0 | (6.8) | 21.8 | |||||||||||||||||||||||||||
Nutritionals — | ||||||||||||||||||||||||||||||||
International Pediatric Nutritionals | 465 | 509 | (8.6) | (4.7) | (3.9) | |||||||||||||||||||||||||||
U.S. Pediatric Nutritionals | 459 | 338 | 36.1 | — | 36.1 | |||||||||||||||||||||||||||
International Adult Nutritionals | 690 | 708 | (2.6) | (7.0) | 4.4 | |||||||||||||||||||||||||||
U.S. Adult Nutritionals | 353 | 339 | 3.9 | — | 3.9 | |||||||||||||||||||||||||||
Diagnostics — | ||||||||||||||||||||||||||||||||
Core Laboratory | 1,182 | 1,184 | (0.2) | (5.3) | 5.1 | |||||||||||||||||||||||||||
Molecular | 147 | 420 | (65.0) | (1.0) | (64.0) | |||||||||||||||||||||||||||
Point of Care | 134 | 128 | 4.7 | (1.0) | 5.7 | |||||||||||||||||||||||||||
Rapid Diagnostics | 1,225 | 3,525 | (65.3) | (0.8) | (64.5) | |||||||||||||||||||||||||||
Medical Devices — | ||||||||||||||||||||||||||||||||
Rhythm Management | 527 | 524 | 0.4 | (3.6) | 4.0 | |||||||||||||||||||||||||||
Electrophysiology | 505 | 485 | 3.9 | (4.9) | 8.8 | |||||||||||||||||||||||||||
Heart Failure | 281 | 250 | 12.4 | (1.2) | 13.6 | |||||||||||||||||||||||||||
Vascular | 617 | 619 | (0.2) | (4.1) | 3.9 | |||||||||||||||||||||||||||
Structural Heart | 461 | 411 | 12.2 | (4.2) | 16.4 | |||||||||||||||||||||||||||
Neuromodulation | 196 | 179 | 9.4 | (1.8) | 11.2 | |||||||||||||||||||||||||||
Diabetes Care | 1,313 | 1,126 | 16.6 | (4.4) | 21.0 |
International Pediatric Nutritional sales, excluding21.8 percent in the effectfirst three months of 2023.
In U.S. Pediatric Nutritionals, Abbott initiated a voluntary recallthe 36.1 percent increase in February 2022sales in the first three months of certain infant powder formula products manufactured at one of its U.S. facilities and stopped production at the facility. The 33.6 percent decrease in U.S. Pediatric Nutritional sales reflects2023 reflects the impact of the unfavorable effects of the voluntary recall and production stoppage partially offset by increased demand for Abbott’s Pedialyte® and PediaSure® products. U.S. sales of certain infant powder formulas were $59 millionformula products in the first quarter of 2022, and $288 millionpartially offset by a decrease in 2023 Pedialyte® sales. Excluding the effect of foreign exchange, the 3.9 percent decrease in International Pediatric Nutritional sales in the first quarterthree months of 2021. Abbott is working with2023 primarily reflects the impact of exiting the pediatric nutrition business in China, partially offset by growth in several other markets.
first three months of 2023 were led by growth of Ensure
20
The 35.147.1 percent increasedecrease in Diagnostic Products sales in the first three months of 2023, excluding the impact of foreign exchange, was driven by lower demand for Abbott’s portfolio of COVID-19 tests intests. In Rapid Diagnostics, sales decreased 64.5 percent in the first three months of 2023, excluding the effect of foreign exchange, due to lower demand for COVID-19 tests. In the first three months of 2023 and growth in routine diagnostic testing in Core Laboratory2022, Rapid Diagnostics COVID-19 testing-related sales were $704 million and Molecular Diagnostics. $3.0 billion, respectively. In the first three months of 2023, Rapid Diagnostics sales increased 5.1 percent, excluding COVID-19 testing-related sales, and increased 8.0 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales.
In Rapid Diagnostics, sales increased 60.8 percent, excluding the effect of foreign exchange, due to the demand for Abbott’s COVID-19 tests on its rapid testing platforms, including the Panbio system, the ID NOW platform, and the BinaxNOW COVID-19 Ag Card test. In the first three months of 2022 and 2021, Rapid Diagnostics COVID-19 testing-related sales were approximately $3.0 billion and $1.8 billion, respectively. In the first three months of 2022, Rapid Diagnostics sales increased 21.6 percent, excluding COVID-19 testing-related sales, and increased 23.5 percent, excluding the impact of foreign exchange and COVID-19 testing-related sales. These increases reflect higher sales of ID NOW tests for flu, strep, and respiratory syncytial virus (RSV) as well as growth in other Rapid Diagnostics products.
Excluding the effect of foreign exchange, total Medical Devices sales grew 11.512.4 percent drivenin the first three months of 2023, led by double-digit growth in Diabetes Care, Electrophysiology, Structural Heart, Heart Failure and Heart Failure. Growth inNeuromodulation. Higher Diabetes Care sales waswere driven by continued growth of FreeStyle Libre®, Abbott’s continuous glucose monitoring system, internationally and in the U.S. and internationally. FreeStyle Libre sales totaled $995 million$1.2 billion in the first three months of 2022,2023, which reflected a 26.225.4 percent increase, excluding the effect of foreign exchange, over the first three months of 20212022 when FreeStyle Libre sales totaled $827 million.
$1.0 billion.
While
MitraClip
Growth in Structural Heart, excluding the effect of foreign exchange, was broad-based across several areas of the business,product along with contributions from recently launched products, including AmplatzerAmulet® Amulet, Navitor® Left Atrial Appendage Occluder, which offers immediate closure of the left atrial appendage, an area in the heart where blood clots can form, and MitraClipTriClip®, Abbott’s market-leading device for the minimally invasive treatment of mitral regurgitation, a leaky heart valve.. In Vascular, the 1.03.9 percent growthincrease in sales, excluding the impact of foreign exchange, during the first three months of 2023 primarily reflects double-digit growth in endovascular sales.
the prior year period.
aortic regurgitation or stenosis.
21
Research and development (R&D) expenses increaseddecreased $43 million, or 6.56.2 percent, in the first quarter of 2022.2023 compared to the prior year. The 2022 increasedecrease in R&D expenses in the first quarter of 2023 was primarily driven by higherthe timing of spending on various projects to advance products in development partially offset byand the favorable impact of foreign exchange.
exchange and the nonrecurrence of 2022 expenses related to the product recall in the Nutritional segment.
Other income, net increased from $61 million of income in the first quarter of 2021 to $78 million of income in the first quarter of 2022. The increase2022 to $111 million of income in the first quarter was primarily due toof 2023. The increase in the first quarter of 2023 reflects higher income in 20222023 related to the non-service cost components of net pension and post-retirement medical benefit costs partially offset by the change in earnings of equity method investments.
costs.
Cash
equivalents.
approximately $195 million.
22
In December 2021, the board of directors authorized the repurchase of up to $5 billion of Abbott’s common shares from time to time. The new authorization was in addition to the $1.081 billion portion of the share repurchase program authorized in 2019 that was unused as of December 31, 2021. In the first quarter of 2022,2023, Abbott repurchased 17.3approximately 3 million of its common shares for $2.1 billion which fully utilized the authorization remaining under the 2019 share repurchase program and a portion of the 2021 authorization. $300 million. As of March 31, 2022, $3.9812023, $2.134 billion remains available for repurchase under the 2021share repurchase program.
program authorized by the board of directors in December 2021.
2022.
23
Evaluation of disclosure controls and procedures.
The Chief Executive Officer, Robert B. Ford, and Chief Financial Officer, Robert E. Funck, Jr., evaluated the effectiveness of Abbott Laboratories’ disclosure controls and procedures as of the end of the period covered by this report, and concluded that Abbott Laboratories’ disclosure controls and procedures were effective to ensure that information Abbott is required to disclose in the reports that it files or submits with the Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by Abbott in the reports that it files or submits under the Exchange Act is accumulated and communicated to Abbott’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
In its 2021 Annual Report on Form 10-K, Abbott reported that it is a defendant in numerous lawsuits in federal and state courts involving certain of its specialty infant formula products administered to preterm infants. In April 2022, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation of the federal court cases in the Northern District of Illinois for pretrial purposes.
24
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||||||||
January 1, 2023 - January 31, 2023 | — | (1) | $ | — | — | $ | 2,434,092,348 | (2) | |||||||||||||||||||||
February 1, 2023 - February 28, 2023 | 600,000 | (1) | 100.933 | 600,000 | 2,373,532,278 | (2) | |||||||||||||||||||||||
March 1, 2023 - March 31, 2023 | 2,369,830 | (1) | 101.037 | 2,369,830 | 2,134,092,391 | (2) | |||||||||||||||||||||||
Total | 2,969,830 | (1) | 101.016 | 2,969,830 | $ | 2,134,092,391 | (2) |
These shares do not include the shares surrendered to Abbott to satisfy tax withholding obligations in connection with the vesting of restricted stock or restricted stock units.
| | | | | | | | | | | |
|
| |
| | |
| |
| (d) Maximum |
| |
| | | | | | | | | Number (or |
| |
| | | | | | | (c) Total Number | | Approximate |
| |
| | | | | | | of Shares (or | | Dollar Value) of |
| |
| | (a) Total | | | | | Units) Purchased | | Shares (or Units) |
| |
| | Number of | | (b) Average | | as Part of | | that May Yet Be |
| ||
| | Shares (or | | Price Paid per | | Publicly | | Purchased Under |
| ||
| | Units) | | Share (or | | Announced Plans | | the Plans or |
| ||
Period | | Purchased | | Unit) | | or Programs | | Programs |
| ||
January 1, 2022 – January 31, 2022 | | 650,000 | (1) | $ | 127.262 |
| 650,000 | | $ | 5,998,449,112 | (2) |
February 1, 2022 – February 28, 2022 | | 8,550,000 | (1) | | 123.643 |
| 8,550,000 | | | 4,941,301,237 | (2) |
March 1, 2022 – March 31, 2022 | | 8,113,060 | (1) | | 118.344 |
| 8,113,060 | | | 3,981,169,070 | (2) |
Total | | 17,313,060 | (1) | $ | 121.296 |
| 17,313,060 | | $ | 3,981,169,070 | (2) |
25
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31.2 |
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Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934. | ||||||||
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32.1 |
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32.2 |
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101 |
| The following financial statements and notes from the Abbott Laboratories Quarterly Report on Form 10-Q for the quarter ended March 31, | ||||||
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104 |
| Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101). |
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By: | /s/ ROBERT E. FUNCK, JR. | |||||||
Robert E. Funck, Jr. |
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| Executive Vice President, Finance |
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| Date: May |
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